Kuwaiti cabinet endorses 15% tax on multinational entities

Kuwait’s Cabinet approved a draft law to introduce a 15 per cent tax on multinational companies operating across multiple jurisdictions. The decision was made during the Cabinet’s weekly meeting at Bayan Palace.

The proposed tax, aligned with international tax standards, aims to combat tax evasion and prevent the diversion of tax revenues to other countries. Deputy Prime Minister and Minister of State for Cabinet Affairs Shereeda Al-Mousherji stated the law would take effect from January 1, 2025.

Attribution: Emirates News Agency (WAM)

Subediting: M. S. Salama

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Japan unveils $734b budget for upcoming FY

Japan’s government plans to allocate $734 billion budget for the upcoming fiscal year, driven by increased social security and debt-servicing expenses, contributing to the country’s significant debt burden.

The 115.5 trillion-yen budget is a result of the Bank of Japan (BOJ) moving away from its long-standing stimulus programme. This shift means the government can no longer depend on low borrowing costs and central bank support to fund its debt.

To enhance public finances, the government aims to reduce new bond issuance in the next fiscal year to 28.6 trillion yen from the current 35.4 trillion yen, as tax revenue is expected to increase.

This is the first time in 17 years that new bond issuance will fall below 30 billion yen. Tax revenue is expected to reach a record 78.4 trillion yen, boosted by the recovery in corporate profits, as per a draft plan seen by Reuters.

The interest rate is expected to rise to two per cent in April from the current 1.9 per cent, increasing debt-servicing costs to 28.2 trillion yen from 27 trillion yen for the current year.

Attribution: Reuters

Subediting: M. S. Salama

S. Korea’s combined debt tops $2.26t

South Korea’s combined government and household debt has reached a new milestone, surpassing 3,000 trillion won ($2.26 trillion) for the first time, according to government data released on Sunday.

This significant increase is primarily attributed to a decline in tax revenue, increased government bond issuance, and aggressive borrowing by households for real estate investments.

As of the end of the second quarter, the country’s combined national and household debt reached a record 3,042 trillion won, representing approximately 127 per cent of last year’s nominal GDP.

The national debt, which primarily consists of government bonds, loans, and financial obligations, increased by 30.4 trillion won from the previous quarter to 1,146 trillion won. This rise was influenced by factors such as the sluggish economy and ongoing tax revenue shortfalls.

Meanwhile, household debt surged to a new high of 1,896 trillion won, driven by the recent recovery in housing transactions and associated loan increases.

The combined debt of the government and households rose by 44 trillion won in the second quarter, compared to a 20 trillion-won increase in the first quarter. This marked the largest quarterly increase since the third quarter of 2021, when the COVID-19 pandemic was at its peak.

Attribution: Yonhap News Agency

 

Subediting: M. S. Salama

Egypt allocates EGP 500b for Decent Life programme – FinMin

Egypt’s government has allocated 500 billion Egyptian pounds ($10.16 million) for the first two phases of the national project Haya Karima (Decent Life), aimed at improving the lives of half of Egypt’s population and enhancing public services, Minister of Finance Ahmed Kouchouk announced on Tuesday.

In his first press conference since taking office, Kouchouk revealed that tax revenues have increased by 30 per cent, which has been channelled into health, education, and social protection programmes.

He noted a 60 per cent growth in revenue, surpassing the growth rate of expenditures. Additionally, non-tax revenues surged by 190 per cent due to diversified state revenues, including a 50 per cent share from the Ras Hekma deal.

The minister also reported a 25 per cent increase in education spending, a 24 per cent rise in health sector funding, and a 20 per cent boost in social protection spending over the past fiscal year, all exceeding the 18 per cent growth rate in non-debt-related expenditures.

Export support reached 12.9 billion pounds, bringing the total export assistance provided to over 65 billion pounds for more than 3,000 companies since October 2019, he added.

Furthermore, 2,527 investors benefited from the support initiative for productive sectors, receiving approximately 80 billion pounds.

Kouchouk acknowledged that debt servicing remains high due to inflation and interest rates, with the government aiming to reduce it to 35 per cent of total expenditures in the medium term.

Attribution: The Egyptian Cabinet

Egypt’s economic performance to beat June targets – minister

Egypt’s economic and financial performance is showing positive developments, with expectations to surpass targets by next June, as announced by Finance Minister Mohamed Maait on Tuesday.

This improvement is largely due to the Ras El Hekma development project, which is expected to add approximately $12 billion to the state’s treasury, accounting for 50 per cent of its revenues.

These contributions are predicted to lead to an initial surplus of about 5.75 per cent of GDP and decrease the total deficit to around 3.95 per cent of GDP. The Ministry’s successful tax policy reform programme is reflected in its efforts to maintain the debt rate at 89 per cent of GDP and boost tax revenues by over 23 per cent, Maait said during his meeting with Claire Woodman, CEO of Morgan Stanley’s operations in the Europe, Middle East, and Africa region, on the sidelines of the World Economic Forum held in Riyadh, Kingdom of Saudi Arabia.

Maait highlighted the importance of structural reforms for Egypt’s economic growth and stability, acknowledging the country’s financial and political challenges due to

He emphasised the potential of Ras Al-Hekma development project to attract investments and stimulate economic activities, particularly in agriculture and industry.

The minister also noted the government’s efforts to empower the private sector and stimulate exports, positioning Egypt as an attractive investment destination.

He further expressed eagerness to leverage Morgan Stanley’s expertise in hedging and non-traditional financing to further enhance Egypt’s economic stability and growth.

Egypt’s tax revenues surpass 38% growth rate

Egypt’s Minister of Finance, Mohamed Maait, announced on Monday that Egypt saw a growth in tax revenues of 38 per cent since the beginning of the current fiscal year, as reported by the Egyptian Cabinet.

This significant increase is attributed to the compliance rate for income tax registration standing at 66 per cent and for value-added tax at 49 per cent. During recent campaigns, an immediate payment of 1.6 billion Egyptian pounds was made towards tax liabilities.

Maait emphasised the crucial role of electronic tax systems in providing an accurate database of the volume of commercial transactions at the national level.

The electronic invoice system alone has issued more than a billion electronic invoices. Alongside the electronic receipt and electronic declaration systems, these digital platforms have contributed significantly to enhancing the governance of the tax community.

This led to the successful integration of a portion of the informal economy into the formal sector, further boosting the growth in tax revenues.”