TRANSLATION. Has resolved: Article 1

Transcription

1 TRANSLATION MINISTRY OF FINANCE OFFICE OF THE MINISTER Date: 25 November 2007 Ref.: 16/2/2/ Minister of Finance Resolution no. 58 of 2007 issuing the executive regulation for Law No. (46) of 2006 concerning Zakat and contribution of Public and Closed Shareholding Companies in the State s budget Minister of Finance, After studying: Law No. (46) of 2006 concerning Zakat and contribution of Public and Closed Shareholding Companies in the State s budget. Fatwa no. (14 H) of 2007 issued by Fatwa Supervisory Board at the Ministry of Awqaf & Islamic Affairs to spend funds collected as zakat in its legal channels pursuant to its letter no dated 05 June Has resolved: Article 1 Provisions of the executive regulation for Law No. (46) of 2006 concerning Zakat and contribution of Public and Closed Shareholding Companies in the State s budget shall be applied, whose articles are enclosed herein. Article 2 This resolution shall be published in the official gazette and put into force as of the date of its publishing. Mustafa Jassim Al-Shamally Minister of Finance 1

2 Executive regulation for Law No. (46) of 2006 concerning Zakat and contribution of Public and Closed Shareholding Companies in the State s budget Article 1 Definitions In application of this regulation, the terms below should be defined as follows: Chargeable companies under this Law: all Public and Closed Kuwaiti Shareholding Companies except for the companies stated under the aforesaid Law no. 46 of Chargeable period: The period for which the company prepares its accounts. Total income: The income achieved by the chargeable company, whatsoever its source, before deducing allowable discounts. Net profits: The income achieved by the chargeable company after deducing allowable discounts. Return: The statement in which the chargeable company, under this Law, sets out the results of its business during the chargeable fiscal year accompanied by the financial statements and declares the amount due under this Law. 2

3 Chapter (1) Rules of collection 1- Determining the chargeable income Article 2 Chargeable income is determined based on the gross income resulting from operations of all kinds after deducting allowable discounts, i.e. all expenses and costs incurred by the company which meet the following conditions: 1. Expenses should be real and supported by required documents. 2. Should be related to the activity and necessary to generate profit. 3. Should be related to the chargeable period under the law. Provisions and reserves made by the company are not considered as deductible expenses or costs, except for those made by banks and insurance companies, according to standards and regulations set by the entities having control thereon. The determination of gross income and allowable discounts should be in agreement with valid accounting rules and in accordance with the accepted accounting standards. Article 3 The following amounts may be deducted by the chargeable companies for tax calculation purposes: 1. Cash dividends received by the company from companies that were already accounted for under this Law. 2. Share in the profits received by the company from associates or unconsolidated subsidiaries that were already accounted for the same period under the law. Article 4 The holding company and the chargeable companies (the parent company) which consolidate the financial statements of its subsidiaries should be dealt with as one unit. The amounts paid for its share in the profits of its subsidiaries shall be directly deducted from the amount due thereon as per its return for the same period under the Law with no deductions on its subsidiaries. Article 5 In case any of the years ends in a loss, this loss shall be accepted in such year of loss, and may not be carried forward to the following years. 3

4 2- Companies registration and filing the return Article 6 Public and Closed Kuwaiti Shareholding Companies established prior to the implementation of the Law, shall commit to be registered with the Ministry of Finance in a period no later than ninety days as of the implementation of the law. Public and Closed Kuwaiti Shareholding Companies established after the implementation of the law are also committed to be registered with the Ministry of Finance through a notice to be submitted within thirty days as of the date of its establishment. The Ministry of Finance shall circulate the model adopted for registration of the companies and determine the registration procedures and the data to be enclosed. Article 7 All companies subject to the provisions of this Law should submit the return audited by one of the audit firms registered with the Ministry of Finance to the Ministry on or before the fifteenth day of the fourth month following the end of the chargeable period and shall settle the amount due with the return and enclose the following documents: 1. Balance sheet and financial statements and the notes thereto. 2. Supporting documents of cash dividends received. 3. Minutes of the general assembly. The Ministry of Finance shall circulate the model adopted for the return to which all companies should adhere. Article 8 1- The chargeable company may request to extend the date of filing the return in accordance with the following conditions: A- The extension request is filed within a period no later than the first day of the third month following the end of the chargeable period under this law. No requests will be considered after this date. B- Reasons for the extension should be significant and acceptable, in accordance with the executive circulars issued by the Ministry of Finance. 2- The Ministry of Finance shall respond to the request for an extension within thirty days as of the request date. In case of no reply from the Ministry within this period, this will be considered as an implicit rejection of the extension request. 3- It may be agreed to extend the date of filing the return for a period not more than sixty days from the day following the end of the original date of filing. 4

5 Chapter (2) Rules of collection 3- Procedures of assessment, objection and appeal Article 9 The Ministry of Finance is entitled to examine the return referred to in article (7) of this regulation, and may amend it in light of supporting documents and all substantive evidences thereto. The Ministry is also entitled to issue an assessment on a deemed basis for the chargeable companies not committed to file the return, and other cases where it is not possible to determine the chargeable income in accordance with executive circulars issued by the Ministry. Article 10 In case of amending the return or the assessment on a deemed basis, a chargeable company is entitled to file an objection against a tax assessment within sixty days as of the date of notification through the assessment letter. Should the mentioned date elapse without objection, the tax assessment shall be deemed final and the company should make the payment within the thirty days following the date at which the tax assessment is deemed final. Article 11 The Ministry of Finance should resolve upon the objection within ninety days following the date of its filing, and should the Ministry of Finance agree with the chargeable company on fixing the amount due within the aforesaid period, the assessment should be issued in accordance with this agreement and shall be deemed final and the chargeable company should make the payment within the thirty days following the date of the agreement. If the Ministry did not respond to the objection within the period referred to above, this shall amount to a rejection of the objection. Article 12 Should the objection of the chargeable company be expressly rejected or by implication, it may appeal against the rejection decision before the Tax Appeal Committee at the Ministry within thirty days as of the date of notifying that the objection is rejected, or as of the date at which the objection should have been resolved, elapsed without response. The appeal, together with all the supporting documents, shall be submitted in a written form to the mentioned Committee. The Minister of Finance issues a decision to form the Tax Appeal Committee or more, the decision sets out its authority and work procedures. 5

6 2- Re-issuance of the assessment and correction of the final assessment Article 13 Subject to the provisions of Article (10) of this regulation, the Ministry of Finance is entitled to reissue the assessment with the amount due related to years already assessed in case it finds out that certain revenues were not declared by the company in its filed returns for the years on which the assessment has been issued, or if the company recorded untrue expenses or expenses not related to such years with aim of reducing the profits. The reissued assessment letter should include the foundations on which it is based and should be notified to the company. Article 14 Subject to the provisions of Article (10) of this regulation, the Ministry of Finance is entitled, automatically or upon the company s request, to correct any material or accounting errors in the assessment letter once it is detected. 3- Disbursement and collection procedures Article 15 The chargeable companies shall settle the amount due thereon as per the return on or before the fifteenth day of the fourth month following the end of the chargeable period. These companies are entitled under this Law to determine their zakat out of the settled amount and give the due amount or a part thereof to one of the public services. If the companies did not do, the Ministry shall give such amount in accordance with the law. Article 16 The chargeable companies shall pay any additional amount in excess of the amount due as per the return in case of any amendments made by the Ministry to the return within thirty days as of the date of the assessment issuance. Article 17 The amount due as per the decision of the appeal committee is deemed final and due within thirty days as of notification of the assessment letter based on the committee s decision even if it was appealed before the courts. 6

7 Chapter (3) Rules of disbursement of the collected funds 1- Legal channels Article 18 The Ministry of Finance shall spend zakat amount from the collected funds of the chargeable companies in its legal channels specified in the aforesaid letter of Fatwa Supervisory Board at the Ministry of Awqaf & Islamic Affairs. 2- Public services Article 19 The Ministry of Finance shall spend the funds collected from the chargeable companies under the law for the benefit of the following public services: 1. Security and justice. 2. Defence. 3. Educational services. 4. Health services. 5. Social solidarity and social affairs. 6. Information services. 7. Religious services. 8. Housing. 9. Utilities. 10. Electricity and water. 11. Agriculture and Fisheries. Article 20 The Ministry of Finance shall spend the funds collected from the chargeable companies under the law for any item of the state s budget if the company did not specify that. 7

8 Chapter (4) General provisions Article 21 The Ministry of Finance in coordination with governmental authorities shall provide services to the chargeable companies under this law only after these companies submit a clearance certificate from any obligations thereon under this law. Article 22 Unless a provision is stated in this regulation, established resolutions and circulars of the Ministry of Finance shall be applied, as well as those issued by the Minister of Finance or his deputy pursuant to the provisions of the law. Article 23 All officials, each within his jurisdiction, shall implement the provisions of this regulation with effect from the date of its issue, and shall be published in the official gazette. The Minister of Finance 8