Dubai: Kuwait's Cabinet has approved a draft decree-law adopting a Gulf-wide excise tax agreement that would impose taxes of up to 100 per cent on tobacco and energy drinks, as the country seeks to reduce consumption of products harmful to health and generate an estimated KD200 million in annual non-oil revenue.
The Cabinet approved the draft concerning the Gulf Cooperation Council's Unified Excise Tax Agreement and its amendment during a meeting on Tuesday, October 27, and referred it to Emir Sheikh Meshal Al Ahmad Al Jaber Al Sabah for approval, according to an official statement.
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Under the proposed framework, energy drinks and tobacco products would be subject to a 100 per cent excise tax, while carbonated beverages would face a 50 per cent levy. Sweetened drinks would be taxed at varying rates depending on their sugar content.
The tax is intended to discourage the consumption of products considered harmful to public health or the environment while helping Kuwait diversify government revenue beyond oil.
Kuwait's former finance minister, Noura Al Fassam, previously estimated that the introduction of excise tax could generate approximately KD200 million annually, providing an additional source of non-oil income.
The GCC agreement establishes a common framework for imposing and collecting excise taxes, monitoring the movement of taxable goods and harmonising tax regulations among member states.
It also seeks to strengthen economic integration and bring financial and economic legislation across the six Gulf countries into closer alignment.
Under the agreement, the GCC Financial and Economic Cooperation Committee is responsible for determining which goods are subject to excise tax, setting applicable rates and approving subsequent amendments.
The Cabinet's approval represents a step towards implementing the tax framework in Kuwait, although the government has not announced a date for the new levies to take effect.
The decision was part of a Cabinet meeting chaired by Prime Minister Sheikh Ahmad Abdullah Al Ahmad Al Sabah, which also reviewed several economic, infrastructure and regional developments.
Ministers were briefed on the recent official visit of Italian Prime Minister Giorgia Meloni, during which Kuwait and Italy signed agreements covering investment cooperation and military training, alongside a letter of intent involving Italian defence company Leonardo.
The Cabinet also reviewed progress on major infrastructure projects, including the North Kabd wastewater treatment plant, road maintenance and rehabilitation programmes, and improvements to road networks serving Kuwait International Airport's new Terminal 2.
Ministers stressed the importance of completing infrastructure projects on schedule, maintaining construction standards and improving road safety and traffic flow across the country.