KUWAIT, May 27: Kuwait’s cabinet will study a proposal to introduce income tax for the first time in the Gulf Arab country, a finance ministry official and state media said on Saturday.

“This is a comprehensive law; it covers every kind of income without regard to the nationality of the tax- payer,” a senior finance ministry official said.

“So everybody generating income in Kuwait will be taxed at a flat rate of 10 per cent,” he added.

State news agency KUNA said cabinet committees were expected to study the draft law and then refer it to the next parliament term.

Parliament has been dissolved but a new assembly, to be elected on June 29, will have the right to vote on bills passed after the dissolution of its predecessor.

Kuwait, a country of about 2.7 million people, including about one million Kuwaitis, does not collect income tax from the citizens or expatriate workers.

The OPEC oil producer controls nearly a tenth of global petroleum reserves and oil sales account for up to 50 per cent of GDP and up to 90 per cent of state revenue. Kuwait is expected to log a budget surplus of some $24 billion in the fiscal year that ended March 31, 2006.

Finance minister Bader al-Humaidhi on Saturday sent to the cabinet the comprehensive tax law drafted after economic studies were carried out by a Dutch financial institution in accordance with international criteria and Kuwaiti law, KUNA added.

The agency said the new draft law “aims to provide a suitable investment climate in Kuwait, restructuring public finances and supporting economic development”.

On Wednesday, the cabinet approved a bill that would slash tax on foreign firms to a flat 15 per cent from current level of up to 55 per cent.—Reuters