(MENAFN- Arab Times) The Ministry of Finance has put the final touches on the proposal to increase fuel prices as part of the plan to gradually lift subsidies on services and commodities, reports Al-Nahar daily quoting high level governmental sources. Sources disclosed the proposal covers three types of fuel, indicating the price of 'ultra' will be increased from 90 fils to 130 fils, from 65 fils to 100 fils for 'octane', and 60 fils to 90 fils for 'super'. Sources asserted this means there will be 50 percent hike in the prices of these types of fuel.
Sources said the recommended period for the implementation of the decision is by the beginning of fiscal 2016/2017 € next April. Sources added the ministry intends to lift fuel subsidies gradually, not one time like the United Arab Emirates (UAE). Sources stressed the State of Kuwait will save about KD 400 million if this step is taken. According to sources, the current subsidy for services costs KD 3.7 billion and the results of a study on the proposal to lift subsidies will be submitted to the Cabinet before the year ends.
To preserve economic and social stability and continue with development plans, MENA governments are considering tax measures to broaden their revenue base and increase tax yields. The evolving tax landscape in the MENA region was discussed at the EY MENA Tax Conference held recently in London. The conference was attended by EY Tax specialists and senior finance and tax executives from major European companies with investments in the MENA region. Sherif El-Kilany, MENA Tax Leader, EY, says: "Governments in the region have faced a myriad of challenges arising from political, economic and social factors.
The economic cost of the disruptions caused by the Arab Spring, the urgent need for social reform and fall in oil price, represent challenges that Governments are tackling head on with new fiscal reforms. Fiscal policy initiatives are now focusing on ways to broaden the revenue base, promote investment in projects that create value addition to existing oil and gas export projects and stimulate investment in the non-oil and gas sector.
Most of the countries in the region have embarked on large-scale infrastructure development projects, including rail, seaports, electricity and water generation and improvements to transport networks and industrial facilities." Investment incentives to increase foreign direct investment Governments have recognized the importance of tax policy as a conduit to incentivizing multinational companies to establish in the region. Asim Sheikh, EY MENABusiness Tax Services Leader, says: "Tax law reforms have led to a lowering of corporate tax rates and adoption of modern taxation principles aimed at providing greater certainty for taxpayers in how tax rules are applied.
Most countries have also recognized the need to expand their double taxation treaty network aimed at enhanced cooperation with developed countries and improved exchange of information. The impact of these reforms has positioned MENA countries as being attractive locations to establish businesses and to operate trading hubs in the region." Whilst the reforms have created a competitive tax landscape in the region, such reforms should not be interpreted as Governments abdicating their right to collect their fair share of taxation. Although tax rates have fallen, most countries have expanded their withholding tax regimes, introduced modern definitions of tax residence and permanent establishment concepts and published transfer pricing guidelines aimed at bringing increased sources of income into the domestic tax net.
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