Posted on 01/01/2008 12:13:08 PM PST by Lorianne
KUWAIT CITY (AFP) — Kuwait's parliament passed a law on Wednesday slashing tax on net profits of foreign companies to 15 percent from 55 percent in a bid to attract more investment from abroad.
The legislation, which has been under discussion for several years, will come into force once it is approved by the emir of the oil-rich Gulf state, Sheikh Sabah al-Ahmad al-Sabah.
Thirty-seven MPs voted in favour of the government-sponsored law while 17 voted against.
The head of parliament's financial and economic affairs panel MP Ahmad Baqer said the new legislation will replace a 1955 law, which has been hindering the flow of foreign investment into the oil-rich emirate.
"The law will encourage foreign investors in all sectors of the economy," including the massive oil sector which generates 95 percent of public revenue, Baqer told reporters.
Kuwait struggles to attract foreign investment, with inflows of about 300 million dollars in 2006, compared with 18.7 billion dollars for the United Arab Emirates, Finance Minister Mustafa al-Shamali told parliament.
He said the law was an important tool in the effort to transform the Gulf state, which heavily relies on oil as the sole source of income, into a regional financial and trade hub.
"We actually do not need the money. We need the expertise and technology that come with foreign investors," Shamali said.
The law, which will also apply to Kuwaiti firms which represent foreign firms exclusively, is one of a series of measures to boost foreign investment and invigorate the economy.
Kuwait has opened up the Kuwait Stock Exchange to foreigners and has begun implementing the foreign direct investment law that offers incentives, including tax holidays of up to 10 years.
It has also allowed foreign banks to operate in the emirate.
Parliament is also due to debate a number of other economic bills including privatisation, transforming Kuwait Airways into a private company and an upgraded bill on Build-Operate-Transfer projects, Baqer said.
Kuwait, which has financial assets worth around 250 billion dollars, is planning investments worth close to 100 billion dollars in the oil and other sectors over the next 10 years.
Kuwaiti businessmen, citizens and foreign residents pay no income tax but the cabinet is studying a comprehensive income tax bill that stipulates collecting taxes on profits of Kuwaiti companies but spares low salaries.
How come these guys “get it” and none of the yahoos in Washington D.C. do?
Cut the annoying visa process you’ve recently pulled on Americans, Kuwait, and then we’ll talk. ;-)
How much would business pay under the flat tax plan, more or less than 15%??
Under the Fairtax it would be a big fat zero... that would bring back all the companies that moved away to avoid our tax code and keep more of their profits.
And it only took them 52 years to "get it."
Pay the Al Maha Services....
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