Ministerial Resolution No. 75 of 2024 Issuing the Executive Regulations of Decree-Law No. 6 of 2024 on the Exchange of Information for Tax Purposes

Ministerial Resolution No. 75 of 2024
Issuing the Executive Regulations of Decree-Law No. 6 of 2024 on the Exchange of Information for Tax Purposes

Article One

The provisions of the Executive Regulations of Decree-Law No. (6) of 2024 on the Exchange of Information for Tax Purposes, attached to this Resolution, shall be applied.

Article Two

Every provision that conflicts with the provisions of these Regulations is hereby repealed.

Article Three

The competent officials, each within their own remit, shall implement this Resolution, which shall be published in the Official Gazette and shall come into force on the day following its publication.

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

Chapter One – Definitions

Article 1

In applying the provisions of these Regulations, the following words and expressions shall have the meaning assigned to each of them, unless the context of the text requires otherwise:
– The Decree-Law: Decree-Law No. 6 of 2024 on the Exchange of Information for Tax Purposes.
– The Regulations: the Executive Regulations of the Decree-Law.
– Agreements on the Exchange of Information for Tax Purposes means any international treaty or agreement, bilateral or multilateral, between the State of Kuwait and other jurisdictions, that provides for the exchange of information for tax purposes and has entered into force in the State of Kuwait in accordance with the provisions of the law and the Constitution, including:
1. The Agreement concluded between the Government of the State of Kuwait and the Government of the United States of America to Improve International Tax Compliance and to Implement the Foreign Account Tax Compliance Act (FATCA), approved by Law No. 109 of 2015.
2. The Convention on Mutual Administrative Assistance in Tax Matters, approved by Law No. 76 of 2018.
3. The Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information.
– Common Reporting Standard (CRS): the common standard on reporting and due diligence for financial account information set out in Section B of Part II of the publication “Standard for Automatic Exchange of Financial Account Information in Tax Matters” approved by the Council of the Organisation for Economic Co-operation and Development (OECD) on 15 July 2014, and its Commentaries, and any amendments made thereto.
– Commentaries on the Common Reporting Standard: the commentaries on the Common Reporting Standard set out in Section B of Part III of the publication “Standard for Automatic Exchange of Financial Account Information in Tax Matters” approved by the Council of the Organisation for Economic Co-operation and Development on 15 July 2014, and any updates made thereto.
– Exchange of Information on Request: the exchange of information on the basis of a request submitted by a jurisdiction concerning specific cases, in accordance with the provisions of the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard.
– The Request: a request submitted to the Competent Authority to obtain information, in accordance with the Agreements on the Exchange of Information for Tax Purposes.
– The Requesting Jurisdiction: the jurisdiction that submits a request to be provided with information, in accordance with the Agreements on the Exchange of Information for Tax Purposes.
– Automatic Exchange of Information: the automatic exchange with other jurisdictions, without prior request and at specified regular intervals, of the information specified in accordance with the provisions of the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard.
– Taxpayer Identification Number: an identifying number specific to the taxpayer, or the number that performs that function where there is no taxpayer identification number.
– Reportable Account: a financial account maintained by a Reporting Financial Institution and identified, pursuant to due diligence procedures consistent with the Common Reporting Standard and the Agreements on the Exchange of Information for Tax Purposes, as an account held by one or more persons who are reportable with respect to another jurisdiction, or a financial account held by a Passive Non-Financial Entity with one or more Controlling Persons who are reportable with respect to another jurisdiction.
– Reportable Jurisdictions:
1. For the purposes of applying the due diligence procedures set out in the Common Reporting Standard: any jurisdiction other than the State of Kuwait and the United States of America.
2. For the purposes of reporting: any jurisdiction other than the State of Kuwait that is a party to an agreement concerned with the exchange of information for tax purposes.
– Participating Jurisdictions: any jurisdiction included in the list of Participating Jurisdictions in accordance with the provisions of the Common Reporting Standard.
– Anti-Money Laundering/Know Your Customer (AML/KYC) Procedures: the due diligence procedures required in respect of the customers of the Reporting Financial Institution, in accordance with anti-money laundering requirements or similar requirements to which that Reporting Financial Institution is subject.
– Documentary Evidence: the expression “Documentary Evidence” includes any of the following:
1. A certificate of residence issued by a competent government body of the jurisdiction in which the payee claims to be resident.
2. With respect to individuals, any official identification document issued by a competent government body that includes the individual’s name and is used for identification purposes.
3. With respect to entities, any official documentation issued by a competent government body that includes the name of the entity and the address of its principal office in the jurisdiction in which it claims to be resident, or in the jurisdiction in which it was incorporated.
4. Any audited financial statements, third-party credit report, bankruptcy filing, or securities regulator’s report.
Any word or expression not defined in these Regulations shall have the same meaning as in the Decree-Law, and as in the tax agreements referred to and the Common Reporting Standard where the Decree-Law contains no such meaning.

Chapter Two – Exchange of Information

Article 2

Functions of the Competent Authority

For the purpose of supervising the application of the Decree-Law and its Regulations, the Competent Authority may carry out the following functions in accordance with the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard:
1. Determining and amending the reporting dates and formats with which Reporting Financial Institutions are required to comply.
2. Requesting and receiving any information that is required to be reported.
3. Requesting the Financial Institution or the competent Supervisory Authority to provide any additional information or documents.
4. Collecting and reviewing the information and supporting documents required to be submitted by the Reporting Financial Institution, the Account Holder or the Controlling Person, as the case may be.
5. Issuing the necessary forms.
6. Any other functions that may be required to implement and ensure compliance with the provisions of the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard.

Article 3

Functions of the Supervisory Authorities

For the purpose of achieving compliance with the provisions of the Decree-Law and its Regulations, the Supervisory Authorities may carry out the following functions in accordance with the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard:
1. Issuing instructions and directives to the Financial Institutions subject to their supervision, in coordination with the Competent Authority.
2. Issuing the forms to be completed, in coordination with the Competent Authority.
3. Assisting the Competent Authority in collecting the information and supporting documents that it requests or that are required to be submitted by the Reporting Financial Institution, the Account Holder or the Controlling Person.
4. Cooperating with the Competent Authority in reviewing the information and supporting documents to verify their completeness and accuracy.
5. Providing the Competent Authority, at its request, with the information, documents and records in their possession relating to the Controlling Person and the Account Holder at the Financial Institutions subject to their supervision, within the period specified in the request.
6. Taking supervisory and audit measures in respect of the Financial Institutions subject to their supervision.
7. Regulating the grievance procedures relating to the administrative measures prescribed under the Decree-Law and its Regulations.
8. Any other functions necessary to apply the provisions of the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard.

Article 4

Exchange of Information on Request

1. The Competent Authority may request specific information from any jurisdiction, and jurisdictions may request specific information from the State of Kuwait, in accordance with the provisions of the Decree-Law and its Regulations, the Agreements on the Exchange of Information for Tax Purposes and the resolutions issued in this regard.
2. The Competent Authority may not refuse a request for information on the ground that the subject matter of the request is in dispute in the State of Kuwait, or that the information is not necessary for tax purposes in the State of Kuwait.

Article 5

Procedures and Controls for the Exchange of Information on Request

Jurisdictions may request information from the State of Kuwait in accordance with the following procedures and controls:
1. The request for information shall include the following:
a. The identity of the person or entity concerned, whether identifiable by name or otherwise.
b. A description of the information requested and the form in which the Requesting Jurisdiction wishes to receive that information.
c. The period to which the requested information relates.
d. The tax purpose of the request for information.
e. The grounds for believing that the requested information is held in the State of Kuwait, or that the person in whose possession or under whose control the information is located is in the State of Kuwait.
f. The name and address of the person holding the information in Kuwait, if known.
g. A statement that the request is in conformity with the legal and regulatory requirements and administrative practices of the Requesting Jurisdiction, such that the Requesting Jurisdiction would be entitled to obtain the information under its law or in the normal course of its administrative practice if the information were in its possession.
h. A statement that the Requesting Jurisdiction has exhausted all the usual sources of information available under its domestic tax procedures and has been unable to obtain the requested information.
2. In the case of a group request, the request shall include, in addition to the requirements set out in paragraphs (b to h) of Clause (1) of this Article, the following information:
a. A detailed description of the group that is the subject of the request for information.
b. An explanation of how the requested information would assist in determining compliance with the tax obligations of the members of the group to which the request relates.
3. The Competent Authority shall examine whether or not the request for information is consistent with the provisions of the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes and the resolutions issued in this regard.
4. Where the requirements set out in Clauses (1 to 3) of this Article are not satisfied, the Competent Authority shall notify the Requesting Jurisdiction accordingly and give it the opportunity to complete its request.
5. If the Competent Authority decides, after following the procedure referred to in Clause (4) of this Article, that the request is incomplete, the Competent Authority shall reject the request and notify the Requesting Jurisdiction accordingly.
6. Where the request is complete and the Competent Authority has sent it to the person or body concerned in the State of Kuwait, that person or body shall comply with the request and provide the requested information and documents to the Competent Authority in the proper form within 21 days from the date of receipt of the request, in accordance with the form specified by the Competent Authority; and the Competent Authority may amend the period referred to in this Clause.

Article 6

Common Reporting Standard Obligations

1. Financial Institutions shall comply with the provisions of the Common Reporting Standard, including the due diligence requirements.
2. For the purposes of applying the Common Reporting Standard, the following shall be observed:
a) Information returns shall state the Kuwaiti dinar equivalent of amounts denominated in US dollars, according to the exchange rate determined by the Central Bank of Kuwait.
b) Subparagraph (4)(E) of Section VIII of the Common Reporting Standard shall be applied as follows: an Entity is a Related Entity of another Entity if either Entity controls the other Entity, or the two Entities are under common control, or if each of them is an Investment Entity as described in subparagraph (6)(b) of paragraph (A) and they are under common management and such management fulfils the due diligence obligations of those two Investment Entities; and for this purpose, control includes direct or indirect ownership of more than (50%) of the vote and value in an Entity.
3. The Competent Authority may issue guidance on the application of the provisions of the Common Reporting Standard.

Article 7

Identification of Reportable Accounts and Persons

Financial Institutions shall take all the measures necessary to collect information in order to identify reportable accounts and persons, including the processing of personal data, in accordance with the provisions of the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard.

Article 8

Information Return

1. Each Reporting Financial Institution shall submit to the Competent Authority information returns on reportable accounts, in accordance with the following deadlines:
a. Common Reporting Standard returns: no later than 31 May of the calendar year following the year to which the return relates.
b. FATCA returns: no later than 31 August of the calendar year following the year to which the return relates.
2. Information returns shall be submitted electronically using the technology and forms approved by the Competent Authority.
3. In preparing and submitting the information return, Reporting Financial Institutions shall comply with the due diligence requirements and procedures set out in the Common Reporting Standard or in the Agreements on the Exchange of Information for Tax Purposes, as the case may be.
4. The information return shall include all the data required under the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard, and in particular the following:
a. The name of the Reporting Financial Institution and its civil number (if any).
b. The name, address, jurisdiction of residence and Taxpayer Identification Number (if any) of each Reportable Account Holder.
c. The account number(s).
d. The account balance or value as of 31 December of the relevant year or, if the account was closed during that year, at the date of its closure; the account balance includes proceeds or any amounts received.
e. The currency in which the amounts stated in the reported information are denominated.
f. The date and place of birth (in the case of individuals).
g. With respect to entities that hold accounts with the Financial Institution, the disclosure of the data referred to above is not limited to the entity alone but also applies to any of the Controlling Persons of the entity.
5. If, during any calendar year, a Reporting Financial Institution establishes, upon applying the due diligence procedures specified in the Common Reporting Standard, the Agreements on the Exchange of Information for Tax Purposes and the rules issued by the Competent Authority, that it does not maintain any reportable financial account, it shall notify the Competent Authority accordingly by means of a nil information return within the same deadlines specified for submitting the information return on reportable accounts.
6. The Competent Authority may automatically transmit the information referred to in this Article to the Reportable Jurisdictions in accordance with the Agreements on the Exchange of Information for Tax Purposes, no later than 30 September of the calendar year following the reporting year concerned with respect to the Common Reporting Standard, and 31 December of the same year with respect to FATCA.

Article 9

Accounts in Currencies Other than the Dollar

Reporting Financial Institutions that maintain accounts in a currency other than the US dollar shall calculate the reporting threshold on the basis of the US dollar equivalent, according to the exchange rate determined by the Central Bank of Kuwait.

Article 10

Extension of Deadlines for Submitting Information Returns

A Reporting Financial Institution may submit to the Competent Authority a request to extend the deadline for submitting the information return referred to in Article (8) of these Regulations for a period not exceeding 60 days, provided that:
1. The Reporting Financial Institution submits the extension request no later than the fifteenth day of the second month following the end of the reportable financial year.
2. The reasons for the extension request submitted by the Reporting Financial Institution are necessary and acceptable to the Competent Authority.
The Competent Authority’s failure to respond to the extension request within 30 days from the date of its submission shall be deemed an implicit rejection of the request; and in all cases, the express or implicit rejection of the request may not be challenged.

Article 11

Use of Service Providers

Reporting Financial Institutions may use service providers to fulfil the obligations to submit information returns and the reporting and due diligence procedures set out in the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard; and in all cases, these obligations shall remain the responsibility of the Reporting Financial Institutions.

Article 12

Internal Systems and Procedures

Reporting Financial Institutions shall apply appropriate internal systems and procedures that ensure compliance with the provisions of the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard, and shall periodically review and approve these policies, systems and procedures.

Article 13

Compliance Officer

The compliance officer referred to in Article (7) of the Decree-Law may be the same officer appointed in respect of the requirements of Law No. 106 of 2013 referred to above.

Article 14

Identity of the Customer and the Beneficial Owner

Reporting Financial Institutions shall identify and verify the identity of the customer and the beneficial owner (Know Your Customer) by means of the following documents:
1. The civil ID card, for citizens and residents.
2. A passport or travel document, for persons not resident in the State of Kuwait.
3. The commercial licence issued by the Ministry of Commerce and Industry, for companies and establishments registered in Kuwait.
4. The documents issued by the competent authorities, for companies and establishments registered outside the State of Kuwait.
5. The documents, papers and court judgments proving that a person represents the person concerned.
6. Any other requirements or documents set out in the Common Reporting Standard.
The competent Supervisory Authority may require Reporting Financial Institutions to apply additional procedures to identify and verify the identity of the customer and the beneficial owner.

Article 15

Reporting and Due Diligence Requirements

1. Reporting Financial Institutions shall establish, maintain and document the due diligence procedures set out in the Common Reporting Standard.
2. A financial account shall be treated as a Reportable Account as of the date on which it is identified as such pursuant to the due diligence procedures set out in Sections II to VII of the Common Reporting Standard and the resolutions issued in this regard.
3. For the purposes of determining the Controlling Persons of an Account Holder of a financial account, a Reporting Financial Institution may rely on information collected and maintained pursuant to Anti-Money Laundering/Know Your Customer (AML/KYC) Procedures.
4. A Reporting Financial Institution may not rely on self-certifications or Documentary Evidence if they are incorrect or unreliable.
5. Reporting Financial Institutions may apply the due diligence procedures for New Accounts to Preexisting Accounts, and the due diligence procedures for High Value Accounts to Lower Value Accounts.
6. The balance or value of a financial account shall be determined as of the last day of the relevant calendar year.
7. Reporting Financial Institutions may apply the residence address procedures to Lower Value Accounts as described in the Common Reporting Standard.

Article 16

Combating Practices to Avoid the Obligations Imposed

Without prejudice to the measures and penalties provided for in the Decree-Law or any other law, the following procedures and arrangements shall be disregarded and treated as if they had not occurred when determining the obligations imposed under the Decree-Law and its Regulations, the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard:
1. The manipulation of account balances at year-end by a Reporting Financial Institution, a service provider or any person or entity in order to avoid reporting.
2. The transfer of balances of individuals or entities from accounts required to be reported to Excluded Accounts or to Non-Reporting Financial Institutions for a short period at year-end in order to avoid reporting.
3. The failure of the Reporting Financial Institution to create any electronic records, or the creation of automated systems artificially separated from one another, in order to avoid the account aggregation rules.
4. Any other procedures or arrangements aimed at avoiding the obligations imposed under the Decree-Law, the Regulations, the Common Reporting Standard and the relevant resolutions.

Chapter Three – Measures and Penalties

Article 17

Criminal Action

1. If the Supervisory Authority concerned discovers any violation of the provisions of the Decree-Law and its Regulations, it shall prepare a memorandum explaining the subject matter and reasons of the violation and the person who committed it, and shall notify the Competent Authority thereof, attaching the documents supporting the commission of the violation.
2. If the Competent Authority considers that the Financial Institution, the Account Holder or the Controlling Person has committed any of the offences set out in Article (14) of the Decree-Law, it shall notify that party in writing of the following:
a. That it has committed an offence under the provisions of the Decree-Law, specifying the offence.
b. The date on which the offence was committed.
c. The offer of settlement.
d. The amount of the fine imposed in the event of settlement.
3. The offender shall pay the amount of the fine prescribed in the event of settlement within a maximum period of 15 days from the date of receipt of the notification sent to the offender.
4. The Ministry of Finance shall have competence to collect the fines prescribed under the provisions of the Decree-Law.
5. If the offender does not pay the prescribed fine within the period specified in Clause (3) of this Article, the Competent Authority shall request the initiation of criminal action.
6. The Competent Authority may coordinate with the body concerned on establishing organisational procedures for completing the papers and data required for the procedures of investigation, disposition and prosecution in respect of the offences set out in the Decree-Law.

Article 18

The Legal Representative of Juristic Persons and Other Entities

For the purposes of applying the provisions of Chapter Three of the Decree-Law, the legal representative of entities for which no legal representative has been designated shall be each partner or member, jointly and severally.

Chapter Four – Final Provisions

Article 19

Coordination Committee

A committee shall be formed by resolution of the Minister of Finance to undertake coordination and cooperation among its members to ensure compliance with the provisions of the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard, and to remove legislative, administrative and technical obstacles; the members of the committee shall be drawn from all or some of the following bodies:
1. The Ministry of Finance.
2. The Ministry of Commerce and Industry.
3. The Fatwa and Legislation Department.
4. The Central Bank of Kuwait.
5. The Capital Markets Authority.
6. The Insurance Regulatory Unit.
7. Any other body in the State of Kuwait concerned with the implementation of this Decree-Law and its Executive Regulations.
The resolution forming the committee shall specify the term of its membership, its rules of procedure and its functions, and the Ministry of Finance shall provide the financial allocations necessary for the remuneration of its members.

Article 20

Lists

The Competent Authority may prepare the lists relevant to the requirements of the Agreements on the Exchange of Information for Tax Purposes and the Common Reporting Standard, and in particular the following:
1. The list of Participating Jurisdictions in accordance with the provisions of the Common Reporting Standard.
2. The list of Reportable Jurisdictions in accordance with the provisions of the Common Reporting Standard.
3. The list of Non-Reporting Financial Institutions in accordance with the provisions of the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard.
4. The list of Excluded Accounts in accordance with the provisions of the Decree-Law and its Regulations, the requirements of the Agreements on the Exchange of Information for Tax Purposes, the Common Reporting Standard and the resolutions issued in this regard.

Issued on 25 September 2024 and published in the Official Gazette Kuwait Al-Youm on 29 September 2024.