Kuwait: Introduces New Service to Access Constitutional Court Rulings

Arab Times, 13 February 2025: The Justice Ministry has unveiled a new service, allowing users to access the Constitutional Court’s rulings via the unified government e-services application, “Sahel.”

Available in the Constitutional Court section of the app, it offers a swift and efficient method for reviewing significant judicial decisions.

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Kuwait: Tightens Money Transfer Regulations to Combat Financial Crimes

Arab Times, 10 February 2025: Kuwait has recently implemented stricter regulations on money transfers, raising concerns for individuals and companies involved in regular financial transactions.

Those who frequently assist friends with money transfers or act as intermediaries for businesses with employees abroad may find their transactions under increased scrutiny.

The Central Bank of Kuwait is enforcing more rigorous measures to verify the actual beneficiaries of financial transfers, even for amounts under 50 dinars.

This scrutiny applies to recurring transactions, requiring individuals to justify the reasons for their transfers, regardless of their relationship with the exchange company.

These regulatory changes aim to strengthen efforts against money laundering and terrorist financing, aligning with the Financial Action Task Force (FATF) guidelines.

The new rules enhance the Central Bank’s oversight, ensuring that financial transfers comply with FATF standards.

Exchange companies must verify customer information and beneficiary data throughout the transaction process, keeping this information updated and confirming its validity.

Due diligence measures include assessing the effectiveness of automated systems that monitor and prevent illicit activities.

Customer and transaction records must be retained for at least five years after a transaction, with data accuracy verified for transactions exceeding 3,000 dinars in one day.

Exchange companies are also required to report suspicious transactions potentially linked to crime or terrorism financing.

The Central Bank emphasises the importance of effective procedures for reporting suspicious activities.

In cases of suspected illicit transactions, thorough investigations and documentation are required, identifying all parties involved and exploring any potential connections to money laundering or terrorism financing.

To ensure compliance, exchange companies must implement customer due diligence measures based on assessed risk levels.

This includes reviewing customer files and transactions, with additional scrutiny for high-risk customers.

Furthermore, exchange companies must engage an audit office, preferably linked to an international entity, to evaluate compliance with Kuwait Law No. 106/2013.

This audit focuses on unusual transactions lacking clear economic justification, with reports required semi-annually.

Ongoing due diligence requires exchange companies to implement an automated system to verify names against lists of individuals and entities subject to freezing orders, ensuring compliance with international sanctions related to terrorism and weapons proliferation.

Under the new framework, exchange companies are prohibited from providing financial services to individuals or entities listed in freezing decisions, reinforcing Kuwait’s commitment to global security efforts.

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Kuwait: Banks Lift Minimum Salary Limit for Opening an Account

Arab Times, 30 January 2025: The Central Bank of Kuwait has issued a directive to banks to open accounts for all customer categories, including those with limited or low incomes, job holders, workers in simple service and craft jobs, and domestic workers.

This move aims to simplify procedures and ensure that banks do not refuse account openings based on salary or income level.

By lifting the minimum salary requirement, middle- and low-income individuals can now access bank accounts in all local banks.

This initiative aligns with the regulatory authority’s focus on financial inclusion, ensuring that banking services are accessible to all segments of society.

It allows individuals to open accounts through official channels at an appropriate quality and cost, protecting their rights and enabling proper money management.

These accounts are crucial for storing funds and facilitating payment transfers.

The removal of barriers aligns with the goal of enhancing financial inclusion, as restricting access to banking services prevents many individuals from accessing useful and affordable financial products.

The effort to make low-value and low-cost bank accounts available also supports the promotion of digital payments.

Recent data indicates that domestic workers make up a significant portion of Kuwait’s workforce, highlighting the importance of this initiative.

The Central Bank stresses the need to make it easier for all societal segments to open bank accounts, urging banks to remove obstacles that prevent certain groups from accessing these services.

The directive also extends to facilitating lending and small deposits, broadening the range of financial services available to all individuals.

This effort aims to provide better opportunities for managing money and securing financial services.

Opening a bank account is seen as a crucial first step in accessing broader financial services, encouraging the use of other financial products like money transfers and limited credit, which can improve quality of life.

Banks are required to comply with the Central Bank’s directive to open accounts for individuals with low salaries, including “worker account holders.

However, these accounts are not actively marketed due to the pressure they place on banking systems, as they typically do not generate significant benefits for banks.

The Central Bank’s initiatives also extend to businesses, including small and medium-sized enterprises (SMEs), with efforts to facilitate access to financial services for these businesses.

The regulatory system is developing strategies and policies to promote financial inclusion, encouraging the use of official financing channels and modern financial technology to reduce operational costs and ease pressures on banks serving low-income customers.

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Kuwait: New Amendments In Real Estate Ownership Law

Arab Times, 22 January 2025: Kuwait has taken a significant step forward by approving amendments to Kuwait Law No. 74/1979, which regulates real estate ownership by non-Kuwaitis.

This move is seen as a progressive effort to enhance human rights and stimulate economic activities within the country.

One of the key changes is the allowance for children of Kuwaiti women from Arab countries to permanently own real estate inherited from their mothers.

This amendment is crucial in affirming their human rights and promoting social stability.

Additionally, the decree introduces exemptions for certain economic entities, including companies listed on Kuwait’s licensed stock exchange, investment funds, and portfolios licensed by relevant authorities, as well as investment entities under the Direct Investment Promotion Law.

These entities are now permitted to own real estate necessary for their operations.

The aim is to boost economic growth while imposing restrictions to prevent real estate speculation, ensuring that properties are used solely for investment and development purposes.

These amendments underscore Kuwait’s commitment to fostering a more inclusive society and a dynamic economic environment.

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Kuwait: Targets Harmful Goods With New Tax Law

Arab Times, 15 January 2025: The Finance Ministry is preparing a selective taxation law aimed at commodities detrimental to human health, with expected annual revenues of KD 200 million (USD 648.3 million).

It was revealed that a significant step in Kuwait’s tax reform is the introduction of corporate income taxes.

This includes Kuwait Decree-Law No. 6/2024 for the Exchange of Information for Tax Purposes and Kuwait Decree No. 157/2024 for taxation on multinational entities.

Kuwait joined the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) on November 15, 2023, which includes 140 countries and jurisdictions.

Since then, efforts have been made to combat international tax evasion and promote transparency in taxation.

Key reforms include treaties on double taxation, combating financial evasion, and agreements for investment protection, alongside ratifying international taxation cooperation treaties.

Entities subject to Kuwait Decree No. 157/2024 are exempt from certain levies, such as those for workers under Kuwait Law No. 19/2000 and alms under Kuwait Law No. 46/2006.

Companies contributing to the Kuwait Institute for Scientific Research will continue their payments, as no exemptions are mentioned in the decree.

Exemptions from the multinational taxation law include some government entities, non-profits, international agencies, and pension and investment funds.

Projected revenues from fees on multinational entities are estimated at KD 250 million (USD 810.6 million) annually, with enforcement set for the 2027-2028 period.

Approximately 300 groups, including 20 Kuwaiti and 25 Gulf groups, will be subject to this tax, with the remainder being foreign entities operating in Kuwait.

This tax enforcement aligns with Kuwait Vision 2035, aiming for a diversified and sustainable economy.

The proceeds will help diversify non-oil revenues and prevent financial outflows to other countries, enhancing Kuwait’s role in international cooperation for fair taxation practices.

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Kuwait: Implements New Regulations to Enhance Employee Management and Data Accuracy

Arab Times, 13 January 2025: The Health Ministry has announced the implementation of updated regulations aimed at improving the management of employees working under the “wage-for-work” system.

This initiative is part of a broader effort to enhance organisational efficiency and update the ministry’s employee database.

The new regulations require all sectors to submit detailed information about authorised personnel who can approve worker lists.

This data, which includes the employee’s name, civil ID number, job title, and official email address, is crucial for ensuring accurate data entry through the electronic form.

Additionally, the regulations mandate the submission of a complete employee data sheet after data entry.

This sheet must be signed and sealed by the employee’s direct manager and department head before being sent via the Injaz program to the office of the Assistant Undersecretary for Administrative Affairs.

The updated rules also stipulate that any internal or external employee transfers will only be allowed following an official decision from the Assistant Undersecretary for Administrative Affairs, contingent upon obtaining the necessary legal and administrative approvals.

Furthermore, all transfer decisions made in 2024, including those already approved, must be reviewed.

This review process will enable the ministry to address deficits and surpluses effectively.

These measures are designed to enhance work systems, ensure a fair distribution of employees based on actual needs, and increase transparency and data accuracy.

The Health Ministry has called on all relevant departments to fully cooperate to ensure the success of these updated procedures and achieve the desired outcomes.

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Kuwait: Considers Introducing VAT

Gulf News, 12 January 2025: Kuwait is weighing the introduction of VAT as GCC nations continue to reform their tax frameworks to diversify revenue sources and align with global standards.

The VAT adoption follows similar measures by other GCC countries, including Saudi Arabia and Bahrain, which have increased their VAT rates to 15% and 10%, respectively.

Qatar and Kuwait are expected to introduce VAT soon, further diversifying income beyond oil revenues.

VAT was introduced across the UAE since 2018 at a standard rate of 5%.

The introduction of VAT represents a pivotal step in the region’s economic transformation, providing governments with additional revenue to reinvest in infrastructure, public services, and sustainable development.

These efforts align with broader global trends as GCC nations modernise their economies and reduce dependence on hydrocarbons.

In addition to VAT, GCC countries are implementing the OECD-endorsed global minimum corporate tax rate of 15%, targeting multinational corporations with revenues exceeding €750 million.

This measure is designed to curb tax avoidance and ensure fair contributions from companies operating in historically low-tax jurisdictions, such as Dubai and Manama.

The UAE has already introduced a 9% corporate tax for businesses with profits above AED 375,000, while maintaining exemptions for small and medium enterprises and tax-free zones to retain its competitive edge.

Kuwait, along with other GCC nations, has implemented the 15% profit tax rate, and Bahrain is set to align with global tax regulations by 2025.

Saudi Arabia and Oman have joined the OECD framework, signaling a unified approach to corporate taxation.

Qatar, maintaining a 10% corporate tax, has indicated plans for future reforms.

Despite these changes, the GCC remains attractive for businesses, owing to its no-income-tax policy.

While Oman has considered a personal income tax for high earners, most GCC nations remain committed to a tax-free income environment.

To enhance compliance and efficiency, the region is embracing digital tax initiatives.

Saudi Arabia and the UAE have introduced e-invoicing systems to reduce fraud and streamline operations for businesses, showcasing their commitment to modernising tax systems.

These reforms aim to strengthen economic resilience, attract investment, and support job creation, positioning the GCC as a hub for sustainable growth and innovation.

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Kuwait: Central Bank Enforces New Security Measures on Bank Card Transactions

Arab Times, 5 January 2025: The Central Bank of Kuwait has issued a directive to local banks to impose financial limits on bank cards and payment operations.

This move aims to enhance security and regulatory controls.

The directive emphasises the need for banks to manage transactions conducted through websites, especially those not requiring a one-time password (OTP), by setting conservative daily limits on both the total value and number of such transactions.

Banks are instructed to create a mechanism, accessible through branches or electronic banking services, allowing customers to adjust their bank card payment limits.

This system should be personalised to each customer’s profile, with notifications for any changes made.

Additionally, banks must seek approval from the Central Bank for these adjustments.

The Central Bank’s directive is part of its ongoing efforts to bolster regulatory controls, improve internal systems, and enhance security measures for all bank cards, including ATM, credit, and prepaid cards.

Banks are required to implement stringent controls on payment operations to ensure security.

Furthermore, the Central Bank stresses the importance of complying with regulations for electronic money payments.

This includes developing policies and systems to detect and address fraud, with mechanisms for reporting fraudulent activities to relevant authorities.

Banks must provide continuous updates on fraud cases as specified by the Central Bank.

Compliance with these instructions is mandatory, and banks are required to submit a detailed timeline for implementing these new requirements.

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