Al Matar, Fatima (2011) The role of taxation in a post-oil Kuwait. PhD thesis, University of Warwick.

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Abstract

Kuwait does not only depend on oil as a sole source of revenue, but has also
nullified all taxes since the discovery of oil in 1938. Under the request of foreign
oil companies extracting and exporting Kuwaiti oil, the Kuwaiti government
founded a primitive tax law which imposes a tax instead of a royalty on foreign
oil companies in order to enable them to credit taxes paid to the Kuwaiti
government against taxes they owe to their home states. This poorly drafted piece
of legislation which is criticised for being ambiguous and lacking the adequate
provisions to regulate crucial tax related issues is Income Tax Decree 3/1955, the
Decree continued to govern taxation in Kuwait even after the full nationalization
of the oil company in 1979, imposing income tax upon the profits of foreign
enterprises carrying out trade and business in Kuwait.
Depending on a sole source of wealth and a highly unstable one such as oil means
that the Kuwaiti economy fluctuates considerably; from the oil boom in the 1970s
to the sharp economic stagnation in the 1980s this economic instability coupled
with the fast depletion of oil reserves, the government’s over spending, the poor
social responsibility due to the absence of individual tax and finally the
extravagant welfare system, have all contributed to the current deficit in the
Kuwaiti budget and have stimulated the government to rethink the possibility of
introducing taxes back into the state.
With taxation being an infinite source of revenue, this thesis argues that there is
an imminent need for Kuwait to advance its fiscal system in an attempt to possibly
turn taxation into a secondary source of revenue in the state. Kuwait has the
potential to attract foreign direct investment which in turn can yield more tax
revenues to the state; however, much improvement needs to be made to Kuwait’s
fiscal law. The government’s attempt to reform the Income Tax Decree of 3/1955
through the 2008 Amendments did not eliminate much of the Decree’s shortfalls.
This thesis studies the Kuwaiti tax system closely from a legal economic point of
view and provides realistic recommendations on how to reform the current system
in order to make Kuwait a more attractive jurisdiction for foreign investment.

Item Type:	Thesis (PhD)
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HJ Public Finance
Library of Congress Subject Headings (LCSH):	Taxation -- Law and legislation -- Kuwait, Oil industries -- Taxation -- Kuwait, Kuwait -- Economic conditions -- 20th century
Official Date:	September 2011
Dates:	Date Event September 2011 Submitted
Institution:	University of Warwick
Theses Department:	School of Law
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Salter, David, LL. B.
Sponsors:	Jāmiʻat al-Kuwayt. Kullīyat al-Ḥuqūq [Kuwait University. Faculty of Law]
Extent:	xvi, 364 leaves : charts
Language:	eng

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