Kuwait's Decree-Law No. 6 of 2024 Regarding the Exchange of Information for Tax Purposes

The Council of Ministers in Kuwait has issued Decree-Law No. 6 of 2024 to enhance tax transparency and compliance with international tax agreements. This law regulates the exchange of information between Kuwaiti tax authorities and international counterparts to combat tax evasion and ensure tax fairness.

General Framework of the Law

• Key Definitions: The law defines crucial terms such as "information," "person," "entity," "legal arrangement," and "reporting financial institutions." These definitions provide clarity for implementing the law.

Exchange of Information Upon Request

• Authority of the Competent Authority: The competent authority in Kuwait, which is the Ministry of Finance or its designee, can request and collect information from any natural person or legal entity within Kuwait and share this information with the requesting country or jurisdiction.

• Obligation to Respond: Individuals or entities must provide the requested information within 21 days, though the timeframe can be amended by the competent authority if necessary.

Automatic Exchange of Information

• Annual Reports: Financial institutions must prepare and submit annual reports containing the required information to the competent authority. If there is no information to report, institutions must still submit a declaration stating this for the relevant calendar year.

• Deadline for Submitting Reports: Reports must be submitted by May 31 of the year following the calendar year to which they relate. Extensions are possible based on specific criteria outlined in the executive regulations.

• Compliance Officer: Financial institutions must appoint a compliance officer and implement appropriate internal systems and procedures to ensure compliance with the law and its executive regulations.

• Record Keeping: Institutions must retain documents and records related to the reports for at least six years, ensuring they are available for review and translation if required by the competent authority or regulatory bodies.

Penalties for Non-Compliance

• Financial Penalties: Fines ranging from KWD 10,000 to KWD 20,000 will be imposed on individuals and financial institutions for non-compliance, failure to submit accurate information on time, or violating due diligence procedures.

• Additional Measures: The law allows for issuing warning letters, prohibiting work in certain sectors, and suspending or revoking licenses in case of violations.

Executive Regulations

• Issuance of Executive Regulations: The Ministry of Finance is expected to issue the executive regulations for this law within the next six months, detailing further implementation guidelines.

Conclusion

Decree-Law No. 6 of 2024 is a significant step towards enhancing tax transparency and compliance in Kuwait. By promoting the exchange of information with other countries, this law aims to combat tax evasion and ensure tax fairness, improving the efficiency of Kuwait's tax system and adhering to international standards.