Decree-Law No. 6 of 2024 on the Exchange of Information for Tax Purposes

Decree-Law No. 6 of 2024
on the Exchange of Information for Tax Purposes

Chapter One
Definitions

Article 1

In applying the provisions of this Law, the following words and expressions shall have the meaning assigned to each of them:
Information: any fact, statement, document, report or record in any form whatsoever, including any information held by banks, other financial institutions, the trustee body, or any persons, including nominees and trustees acting in an agency or fiduciary capacity.
Agreement on the Exchange of Information for Tax Purposes: any international treaty or agreement, bilateral or multilateral, between the State of Kuwait and other States, which provides for the exchange of information for tax purposes and which has entered into force in the State of Kuwait in accordance with the provisions of the law and the Constitution.
Person: a natural or legal person.
Legal Arrangement: any relationship arising under a contract or obligations between two or more parties, or in relation to property, that does not give rise to a legal person, such as trusts and other similar arrangements.
Entity: a Person or a Legal Arrangement.
Competent Authority: the Minister of Finance, his delegate or his legal representative.
State: any country, state, kingdom, emirate, territory, province or islands, or any other form of international entity representing a territory to which an Agreement on the Exchange of Information for Tax Purposes applies.
Controlling Persons: the natural persons who exercise control over an Entity. In the case of a trust, this term means the settlor, the trustees, the protector (if any), the beneficiaries or class of beneficiaries, and any other natural person exercising ultimate effective control over the trust; and in the case of a Legal Arrangement that is not a trust, the term means persons in equivalent or similar positions. The term “Controlling Persons” shall be interpreted in a manner consistent with the Recommendations of the Financial Action Task Force (FATF) and the Executive Regulations of this Law.
Self-Certification: a statement relating to a Financial Account opened with a Kuwaiti Reporting Financial Institution, which includes the information relating to the account, the information required by the institution for the purpose of complying with this Law and its Executive Regulations, and the information provided by the Account Holder or by the Controlling Person of a Passive Non-Financial Entity.
Financial Institution: a Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company.
Reporting Financial Institutions: any Financial Institution, or branch of a Financial Institution, either of which is resident in the State of Kuwait and is not one of the Non-Reporting Financial Institutions.
Non-Reporting Financial Institutions: any Financial Institution that is one of the following:
a) A Governmental Entity, International Organisation or Central Bank, other than with respect to a payment that is derived from an obligation held in connection with a commercial financial activity of a type engaged in by a Specified Insurance Company, Custodial Institution or Depository Institution.
b) A Broad Participation Retirement Fund; a Narrow Participation Retirement Fund; a Pension Fund of a Governmental Entity, International Organisation or Central Bank; or a Qualified Credit Card Issuer.
c) An Exempt Collective Investment Vehicle.
d) A trust, to the extent that the trustee of the trust is a Reporting Financial Institution and reports all information required to be reported with respect to all Reportable Accounts of the trust.
e) Any Entity defined in the Executive Regulations of this Law as a Non-Reporting Financial Institution. The Competent Authority may issue a resolution listing the Non-Reporting Financial Institutions.
Information Return: a report setting out specific information, as set forth in this Law and its Executive Regulations, which the Reporting Financial Institution is required to submit to the Competent Authority.
Due Diligence: the rules and procedures prescribed in the Executive Regulations, which shall be complied with in order to implement the requirements of the Agreements on the Exchange of Information for Tax Purposes.
Supervisory Authorities: the authorities that undertake the supervision of Financial Institutions, including the Central Bank of Kuwait, the Capital Markets Authority, the Ministry of Commerce and Industry, the Insurance Regulatory Unit, and any other authority designated by the Executive Regulations of this Law.
Service Provider: a Person or Entity that provides services to another party.

Chapter Two
Exchange of Information

Article 2

The Competent Authority shall supervise the application of this Law and its Executive Regulations and the implementation of the Agreements on the Exchange of Information for Tax Purposes. All entities and persons shall provide this Authority, automatically or upon its request, with any information required for compliance with the provisions of this Law, its Executive Regulations and those Agreements.

Article 3

Information may be requested from any State in accordance with the Agreements on the Exchange of Information for Tax Purposes.
The Competent Authority shall have the power to request or collect any information in the possession or control of any person within the territory of the State of Kuwait, and to send it in response to a request for that information received in accordance with an Agreement on the Exchange of Information for Tax Purposes.
Every person shall comply with a request for information and shall provide the information to the Competent Authority in the proper form within 21 days from the date of the request; the Competent Authority may amend this period.

Article 4

The Competent Authority may, on its own initiative and without a prior request, send information to States in accordance with the Agreements on the Exchange of Information for Tax Purposes.

Article 5

Reporting Financial Institutions shall, with respect to each calendar year, collect the information required to be reported and send it to the Competent Authority together with an Information Return, in accordance with the Due Diligence requirements set forth in the Law and its Executive Regulations.
Where there is no information required to be reported for a given year, the institutions referred to in the preceding paragraph shall submit to the Competent Authority a return stating that there is no information to be reported for that year.
In all cases, the return shall be submitted to the Competent Authority no later than 31 May of the year following the calendar year to which the return relates. The Competent Authority may extend this deadline in accordance with the rules set forth in the Executive Regulations.

Article 6

Reporting Financial Institutions shall ensure that the Information Returns they submit to the Competent Authority are audited and certified by an auditor from the list of audit firms approved by the Competent Authority.
An auditor may not combine the task of auditing the returns with acting as the auditor of the same Financial Institution whose returns he certifies.

Article 7

Reporting Financial Institutions shall put in place appropriate systems and internal procedures and appoint a compliance officer in order to ensure compliance with the provisions of this Law and the requirements of the Agreements on the Exchange of Information for Tax Purposes.

Article 8

Reporting Financial Institutions shall require customers to complete a valid Self-Certification form upon the opening of every new account, in accordance with this Law, its Executive Regulations and the anti-money laundering requirements (Know Your Customer).
An account may not be opened if the Self-Certification has not been obtained.

Article 9

Reporting Financial Institutions shall keep and document the Due Diligence procedures and requirements set forth in this Law and its Executive Regulations. This includes retaining paper or electronic documents and records, including the Self-Certifications they obtain or create in accordance with the provisions of this Law and its Executive Regulations, properly and clearly, for a period of not less than six years starting from the day following the date of sending the Information Return for the period to which the documents and records relate. They shall also submit them to the Competent Authority or the Supervisory Authorities, and translate them into other languages, if so requested.
With respect to accounts that are not required to be reported, Reporting Financial Institutions shall retain these documents for a period of at least six years starting from the end of the year in which the Reporting Financial Institution relied on the Due Diligence procedures to treat the account as an account that is not required to be reported.
The Competent Authority and the Supervisory Authorities, each within its competence, may periodically review these documents and records to verify the systems and internal procedures put in place by the Financial Institution for the purposes of complying with the requirements of this Law, its Executive Regulations and the Agreements on the Exchange of Information for Tax Purposes.

Article 10

Procedures and arrangements undertaken by a Financial Institution, a Service Provider or any other person for the purpose of avoiding the obligations imposed under this Law and its Executive Regulations shall be disregarded and deemed to be of no effect.

Article 11

The Competent Authority may issue resolutions and explanatory instructions relating to the information and data required to be reported, the means and mechanism of sending them, the forms relating thereto, and the criteria for judging their accuracy.

Chapter Three
Measures and Penalties

Article 12

Upon establishing a violation by a Reporting Financial Institution of the provisions set forth in the Agreements on the Exchange of Information for Tax Purposes, this Law, and the ministerial resolutions and instructions issued in respect thereof, the Supervisory Authorities may impose one or more of the following measures:
1- Issuing written warnings of the violation.
2- Issuing an order requiring compliance with specific procedures.
3- Issuing an order to submit regular reports on the measures taken to remedy the violation concerned.
4- Banning the violator from working in the relevant sector for a period determined by the Supervisory Authorities.
5- Restricting the powers of the members of the Board of Directors, members of the executive or supervisory management, its managers and the Controlling Persons, including the appointment of a temporary administrator.
6- Suspending the licence to carry on the activity.
7- Revoking the licence to carry on the activity.
The Executive Regulations may include any other measures.

Article 13

The penalties set forth in this Law shall be without prejudice to any more severe penalty provided for in any other law.
Nor shall these penalties prejudice the right of the Supervisory Authorities to impose the necessary administrative measures on the basis of this Law or the laws specific to these authorities.

Article 14

The following shall be punished by a fine of not less than ten thousand Kuwaiti Dinars and not more than twenty thousand Kuwaiti Dinars:
1- Any person who fails to comply with a request for information made by the Competent Authority, within the time limit and in the form and manner specified in accordance with the provisions of this Law, its Executive Regulations and the Agreements on the Exchange of Information for Tax Purposes, or who provides incorrect information.
2- Any Reporting Financial Institution that fails to send automatically to the Competent Authority the Information Return and its attachments within the time limits and in the manner specified in accordance with this Law, its Executive Regulations and the Agreements on the Exchange of Information for Tax Purposes, or that sends incorrect or incomplete information.
3- Any Reporting Financial Institution that fails to comply with the Due Diligence procedures and requirements set forth in this Law or its Executive Regulations.
4- Any auditor who certifies an Information Return and fails to disclose the violations and errors contained therein.
5- Any Reporting Financial Institution that fails to comply with any of the provisions of Articles (6, 7, 8, 9) of this Law.
6- Any Reporting Financial Institution that fails to enable the employees of the Competent Authority or the Supervisory Authorities to perform their tasks and exercise their powers referred to in this Law and its Executive Regulations.
7- Any person who violates the obligation set forth in Article (16) of this Law.
8- Any person who completes a Self-Certification form with incorrect data.

Article 15

Criminal action may not be instituted, nor may any measure be taken therein, in respect of the offences set forth in this Law, except upon a written request from the Competent Authority.
The Public Prosecution alone shall undertake the investigation, disposition and prosecution of the offences set forth in this Law.
Settlement may be reached with the accused, after the approval of the Competent Authority, in respect of any of those offences before a final and unappealable judgment is rendered therein, in return for payment of an amount not less than the minimum fine and the removal of the causes of the violation. Settlement shall result in the extinction of the criminal action, without prejudice to the rights of the person harmed by the offence.

Chapter Four
Final Provisions

Article 16

Any information obtained by the Competent Authority in implementation of this Law shall be treated as confidential and may not be disclosed except within the limits prescribed by law and in a manner consistent with the provisions of the Agreements on the Exchange of Information for Tax Purposes.

Article 17

Confidentiality or any restrictions may not be invoked with regard to the implementation of the provisions of this Law, its Executive Regulations and the requirements of the Agreements on the Exchange of Information for Tax Purposes, in the circumstances determined by the Competent Authority.

Article 18

In the event of a conflict between the provisions of this Law and any other law, the provisions of this Law shall apply.

Article 19

The Minister of Finance shall issue the Executive Regulations of this Law within six months from the date of its publication in the Official Gazette.

Article 20

The Ministers, each within his competence, shall implement this Decree-Law, which shall be published in the Official Gazette and shall come into force from the day following the publication of the Executive Regulations in the Official Gazette.

Issued on 8 July 2024 and published in the Official Gazette Kuwait Al-Youm on 14 July 2024.