United States (US) Foreign Account Tax Compliance Act (FATCA)
The state of Kuwait has signed an Intergovernmental Agreement (IGA) with the United States, dated 29 April 2015, in light of FATCA. In this regard, Ministerial Order Number 48 of 2015 (MO No. 48) was issued on 3 September 2015, setting a compliance framework for the financial institutions operating in Kuwait.
Financial institutions (FIs) operating in Kuwait have a series of compliance requirements to adhere to within the deadlines provided by MO No. 48. FIs were primarily required to register with the US Internal Revenue Service (IRS), appoint the Responsible Officer, and implement the compliance requirements by 31 December 2015.
FIs in Kuwait are expected to report on an annual basis on or before 30 September of each year; the report is to include the Specified US Persons identified for each period ending 31 December (i.e. nine months from the year-end). It has been the practice of the MoF to request the reports by 30 August to ensure all financial institutions are reporting prior to the deadline specified by the IRS.
The Common Reporting Standard (CRS)
Kuwait committed to the CRS on 19 August 2016 by signing the Multilateral Competent Authority Agreement (MCAA), with a plan to commence the first reporting period in 2018.
On 12 July 2017, MO No. 36 of 2017 was published in the Official Gazette, which confirmed Kuwait’s commitment to implement the CRS. On 20 August 2017, MO No. 46 of 2017 was issued, whereby specific deadlines for reporting, due diligence, and update of on-boarding procedures were published. Moreover, as specified by the MO, the FIs are required to hire an auditor to provide an opinion on the process and reporting undertaken by the FIs to meet the requirements of the CRS. As per MO No. 36 of 2017, the first report by FIs was expected on or before 31 May 2018. However, it was postponed to 31 August 2018 and again to 1 November 2018. The cut-off date for pre-existing accounts is 31 March 2017 and for new customer accounts on or after 1 April 2017. That said, as of November 2018, the MCAA is yet to be approved by the Kuwaiti Parliament.