Kuwait plans tax on expat remittances, privatisations and subsidy reforms

Kuwait’s government is reportedly planning to impose taxes on expat remittances and companies, reduce subsidies and privatise a number of sectors under reforms to be presented to the new Cabinet and parliament.

Kuwait Times reports that the government is expecting fierce opposition to the austerity measures from the new parliament when it is appointed later this month.

The plans include the privatisation of the education and healthcare sectors, with hospital management to be offered to specilaised companies starting with Jabar Hospital, according to the publication.

School privatisation will begin with one school per educational area.

Another proposal from the government includes the cancelling of subsidies for all but those with limited income.

“The agenda also includes imposing a 10 per cent tax on companies and a 5 per cent tax on expats’ money transfers,” the publication cited sources as saying.

News of the plans follows the release of a report this week by the International Monetary Fund (IMF), which urged Kuwait to enact further subsidy reforms to trim its budget deficit.

The country posted a $15bn deficit in its last fiscal year due to shrinking oil revenues and is expected to need KD35bn ($116bn) over the next six years to finance the shortfall, according to the IMF.

The organisation urged the government to move ahead with plans to “further rationalise energy subsidies”, control public sector wages and increase non-oil revenue.

Last month the government was forced to deny reports that it planned to phase out all public subsidies by 2020.

Read: Kuwait government denies plans to phase out subsidies by 2020

Kuwait’s Emir Sheikh Sabah Al-Ahmad Al-Sabah dissolved the country’s parliament last month after continued sparring between members and the government over fuel price increases imposed in September.

Read: Kuwait ruler dissolves parliament

The increase, which saw prices for some fuel types rise by 80 per cent, was politically unpopular and eventually forced the government to offer citizens a free fuel allowance each month.

Read: Kuwaitis to receive free fuel to compensate for price increase

Several candidates running for the current elections have adopted an anti-austerity ticket, suggesting the disputes that market the end of the previous parliament may continue.