Decree No. 6 of 2024 concerning the Exchange of Information for Tax Purposes
Decree No. 6 of 2024 concerning the Exchange of Information for Tax Purposes
On 14 July 2024, the Kuwait Council of Ministers published Decree No. 6 of 2024 concerning the Exchange of Information for Tax Purposes (“the Law”). The Law puts in place a legal framework for the collection of information required to be reported for tax purposes. It also introduces measures and penalties for incompliant reporting financial institutions.
The Law should help enhance Kuwait’s implementation of the Automatic Exchange of Financial Account Information (“AEOI”) Standard (including the Common Reporting Standards (“CRS”). Although the CRS was implemented in Kuwait since 16 July 2017, there was no sufficient enforcement framework in place locally.
EFFECTIVE DATE OF THE LAW
The Law is effective from the second day following the issuance of its executive regulations. As per the Law, the Ministry of Finance (“MOF”) is to issue the executive regulations within six months of the issuance of the Law i.e., by 14 January 2025.
KEY HIGHLIGHTS OF THE LAW
The Law should help enhance Kuwait’s implementation of the Automatic Exchange of Financial Account Information (“AEOI”) Standard (including the Common Reporting Standards (“CRS”). Although the CRS was implemented in Kuwait since 16 July 2017, there was no sufficient enforcement framework in place locally.
EFFECTIVE DATE OF THE LAW
The Law is effective from the second day following the issuance of its executive regulations. As per the Law, the Ministry of Finance (“MOF”) is to issue the executive regulations within six months of the issuance of the Law i.e., by 14 January 2025.
KEY HIGHLIGHTS OF THE LAW
- The Law grants the MOF the right to request and collect, from natural or legal persons in Kuwait, any information or documents required in response to a request from a foreign authority for the purpose of exchange of information for tax purposes. Information requested from such natural or legal persons must be provided within 21 days.
- Secrecy of client’s information cannot prevent the provision of information requested by the MOF. Article 18 of the Law states that the Law prevails over any other laws in Kuwait in case of any conflict.
- The Law introduces administrative and financial penalties for incompliant reporting financial institutions (“FIs”). There are also penalties for natural and legal persons that fail to provide the MOF with any information requested for the purposes of the Law.
- Reporting FIs must maintain records for a minimum period not less than six years.
- The Law reiterates the key obligations that financial institutions must meet under the CRS, and previously issued Ministerial Resolutions No. 36 and 46 of 2017, covering the collection of self-certifications from customers, carrying out the required due diligence and reporting.
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