Kuwait Tax Alert - June 2020

Summary

The world today has become a stage for a real time stress test of institutions, businesses, governance constructs and our normal ways of life. It has exposed the fragility innate in many of our current practices and constructs. While the world continues to reel under the impact of the crisis, this pandemic has stimulated lateral thinking and has nudged institutions and leaders to rethink and reimage their vision for success.

As businesses gear up to ease into the post COVID-19 world, they are expected to be faced with increased scrutiny from informed minds who now look at the new possibilities for operational optimisation and robustness. Sustainability reporting would be more vital than ever to bolster trust among all stakeholders.

Discussions with the Kuwait Tax Authority (“KTA”)

In addition to the above, based on our discussions with senior officials at the KTA, the following has been communicated:

• Face to face meetings with the KTA officials would be restricted to critical issues only and are subject to certain pre-approvals within the MOF;
• Tax inspectors are expected to start remote working, where possible, from the week commencing 21 June 2020 on case by case basis;
• Tax inspections for companies in the following circumstances to be prioritised:
  • unassessed years approaching the statute of limitation (i.e. 5 years from the date of submission of the returns);
  • tax inspection had commenced prior to closure of the KTA on 12 March 2020 but the tax assessment was not issued; and
  • companies that have completed their Kuwait operations.
• All correspondence with the KTA will be through a dedicated email that are being set up with approved tax advisor firms. This is expected to include submission of the tax declarations, objections and appeals. It is expected that tax assessments would be received from the KTA through this process;
• The KTA will not accept payments through certified cheques. All payments should be transferred to the MOF account at the Central Bank of Kuwait; and
• Companies with a fiscal year end of 29 February 2020 or 31 March 2020, whose tax returns were due for filing on 15 June 2020 and 15 July 2020 respectively are not covered in MO and therefore should submit a request for an extension to the filing deadline, irrespective of the basis of filing.  Typically the KTA would not provide extension to companies filing on a deemed profit basis, however the KTA has indicated they will review the matter given these exceptional circumstances caused by Covid-19. 

A circular is expected to be issued by the KTA providing further guidance on this matter.