Kuwait's parliament approved a government-proposed bill on Wednesday that would slash tax on foreign firms' profits to a flat 15 percent from up to 55 percent.
But profits made by foreign companies from trading in stocks listed on the bourse, whether directly or through mutual funds, will not be taxed at all, according to a copy of the measure obtained by Reuters after the vote.
The cabinet presented the bill in May 2006 in a bid to attract more foreign investment, but a political stand-off with parliament and elections have delayed the approval of the bill. Under a 1953 law foreign firms pay up to 55 percent tax.
The measure becomes law after endorsement by the country's ruler. Under the bill exclusive agents of foreign companies such as car dealerships will also pay 15 percent tax, while Kuwaiti merchants selling foreign products would be exempted as demanded by some lawmakers.
The tax cut plan is crucial for plans by the government to transform the Middle East's fourth-largest oil exporter into a regional financial centre like Gulf Arab neighbours Dubai and Bahrain.
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