Khaled Al-Mutawa

The main reason for arguing on the need for taxation and its efficiency is the income from oil, the for Kuwait's wealth. By now, the country has been an important exporter of the black gold for several decades, and such a fact allowed the state to get the foreign companies interested in investing. Thus, the protection of Kuwait's economic sovereignty and the regulation of the domestic labor market and commercial work are important issues for the government to consider, and taxation is one of the possible ways to solve the problem.

Currently, Kuwait has a special tax program for foreigners that allow new companies from other countries not to pay taxes for up to ten years, and it is intended to increase the volume of foreign direct investment. At the same time, although this state strategy tends to increase the volume of foreign money, it is also aimed to protect the country's natural resources and the environment in general. Therefore, having a tax enforcement in Kuwait is a good idea for several reasons.

First, imposing taxes would increase the income to the state budget, which could later be used to implement some infrastructure-related projects. Moreover, the rich natural resources of Kuwait are one of the convincing factors that the income of people will remain sufficient in the long run and that the foreign companies and individuals will be interested in investing.

Secondly, the proper system of taxation that would calculate the amount of taxes based on the total income would have a positive social impact since it would not only make both foreigners and country's citizens even but also level the volume of the taxes paid for every social class. Finally, tax enforcement could have a positive social and demographic effect because its implementation is not a politically popular decision and would require the teaching of the population on why such an approach is necessary. Thus, such instructing would improve the overall political background of the people living in Kuwait.

Tax reinforcement is not the practice undertaken by Kuwait only. In fact, it is a must in some other states, and these countries managed to achieve an outstanding economic development and prosperity due to this and other measures. For instance, the United Arab Emirates is one of the most prosperous states in the world, and it is also the country with the taxation system aimed at the protection of the national oil industry from foreign capital. This system includes the high taxes of fifty-five percent for the foreign companies and citizens of the country that generate their income from the oil industry within the state. Still, in spite of the high level of taxation, the investing environment remained attractive for the foreign entities, and they continued to be a part of the economy of the United Arab Emirates.

Therefore, the shift toward the tax reinforcement in Kuwait is a natural and modern decision that is likely going to benefit the country. The experience of some other states, such as UAE, shows that although such a step might be politically unpopular, the negative effects of imposing taxes can be mitigated by the proper use of the country's natural resources and correct positioning of the investment environment. Finally, the significant advantage of Kuwait that can both soothe the negative perception of the fact of tax reinforcement and assure that taxes will be a source of income and not a burden for both foreigners and the citizens is the large deposits of oil on the country's territory.

By Khaled Al-Mutawa