ChatGPT on Kuwait Tax - Mixed Results!

Tuhin Chaturvedi - Kuwait - June 4, 2023

https://www.dhirubhai.net/in/tuhin/

[An Arabic translation of this article is below. The translation has been done using Microsoft Word's automatic translation feature, thus, please excuse any inaccuracies in the translation.]

With all the noise around AI, I thought I would check out how well ChatGPT has been trained on taxation in Kuwait.

I asked a number of questions (i.e. entered a lot of 'prompts') and my entire 'conversation' is below. The results were inaccurate. Thus, one should not rely on ChatGPT for advice on Kuwait tax matters. I wonder whether this experience is limited to Kuwait or whether we'll obtain the same or similar results when we prompt ChatGPT on tax queries related to other jurisdictions. Only time will tell. At the moment, the most helpful thing about the responses appears to be the recommendation to consult with a qualified tax professional or refer to the latest tax regulations and guidelines issued by the Kuwaiti tax authorities.

In summary:

(a) Tax retentions: Kuwait has a tax retention system - all companies need to retain 5% from the payments which they make. However, per Chat GPT there is no tax retention system.

(b) WHT: I thought that tax retentions may be covered under Withholding Taxes (WHT). Here the response was correct - Kuwait does not have a WHT regime, but there was no mention of retentions.

(c) Tax rate: When prompted on the corporate tax rate, the response was correct - 15% - but there was the inaccurate statement that the 15% rate applies to "both domestic and foreign companies". In fact, domestic companies are not subject to the 15% tax rate.

(d) Tax rate in the PNZ: I then prompted Chat GPT on the tax rate in the Partitioned Neutral Zone (PNZ) between Kuwait and Saudi Arabia. The initial response alluded to the correct (maximum) tax rate of 50%. There was no mention of the monetary threshold above which this applies, nor the fact that only half the tax is payable in Kuwait but at least there was a reference to the "unique tax regulations". But when I prompted Chat GPT to re-generate its response, it was completely different (and incorrect): there was no separate PNZ tax regime & companies operating in the PNZ continued to be subject to the tax regimes of the two countries.

(e) Tax penalties: On tax penalties there was a lot of "gloss" & general information, but no mention of the specific rates of penalties.

(f) PIT: On personal income taxes the response was correct - "Kuwait does not levy personal income tax on individuals."

Chat GPT can provide different (and contradictory) responses to the same prompt. In addition, different users may be provided with different responses to the same prompt.

Thus, as mentioned earlier, ChatGPT should not be relied upon for tax advice relating to Kuwait. Any such reliance may prove to be a very costly error. In addition, it is probable that the same results will also be obtained for other countries as well. Note also that ChatGPT's "knowledge cut-off time" is September 2021. As also mentioned in the responses below, any developments since that time would not be reflected in ChatGPT's response. Since September 2021 was almost two years ago, this limitation also increases the possibility of erroneous information.

These were the questions asked & the responses received:

The first question I asked was: "What is the rate of tax retention in Kuwait? Chat GPTs response was:

"As of my knowledge cutoff in September 2021, Kuwait does not impose a tax retention system. However, it's important to note that tax laws and regulations can change over time, and there may have been updates since then. Therefore, it is advisable to consult with a tax professional or refer to the latest tax regulations and guidelines issued by the Kuwaiti tax authorities for the most accurate and up-to-date information regarding tax retention in Kuwait."

Could tax retentions be covered under Withholding Taxes? So, my next question was: "What is the withholding tax rate in Kuwait?"

And ChatGPT's response:

"I apologize for the confusion in my previous responses. As of my knowledge cutoff in September 2021, Kuwait does not have a specific withholding tax regime. However, it's essential to note that tax laws and regulations can change over time, and there may have been updates since then.

To obtain the most accurate and up-to-date information regarding withholding tax rates in Kuwait, I recommend consulting with a qualified tax professional or referring to the latest tax regulations and guidelines issued by the Kuwaiti tax authorities. They will be able to provide you with the specific withholding tax rates applicable to different types of income in Kuwait."

Let me move on from Retentions and Withholding Taxes to simple rates of Corporate Tax. My next question: "What is the Corporate Tax rate in Kuwait? and ChatGPT's response: "As of my knowledge cutoff in September 2021, Kuwait imposes a flat corporate income tax rate of 15% on the net profits earned by companies operating in the country. This rate applies to both domestic and foreign companies, with some exceptions and special rules for certain industries or activities.

However, it's important to note that tax laws and regulations can change over time. Therefore, I recommend consulting with a qualified tax professional or referring to the latest tax regulations and guidelines issued by the Kuwaiti tax authorities for the most up-to-date and accurate information regarding corporate tax rates in Kuwait."

Moving on to another more specialised tax rate. My question: "What is the Corporate Tax rate in the Partitioned Neutral Zone (PNZ) between Kuwait and Saudi Arabia?" and ChatGPT's response: "The Partitioned Neutral Zone (PNZ) between Kuwait and Saudi Arabia is subject to its own unique tax regulations. As of my knowledge cutoff in September 2021, the corporate tax rate in the Partitioned Neutral Zone was 50%.

However, it's important to note that the tax laws and regulations governing the PNZ may have changed since then. To obtain the most accurate and up-to-date information regarding corporate tax rates in the Partitioned Neutral Zone, I recommend consulting with a qualified tax professional or referring to the latest tax regulations and guidelines issued by the relevant authorities overseeing the PNZ."

One can request Chat GPT to re-generate its response. This is the re-generated response to the above question: "As of my knowledge cutoff in September 2021, the Partitioned Neutral Zone (PNZ) between Kuwait and Saudi Arabia does not have its own separate corporate tax regime. Instead, companies operating in the PNZ are subject to the tax laws and regulations of the respective countries.

Kuwait has a flat corporate income tax rate of 15%, as mentioned earlier, while Saudi Arabia has a tiered corporate income tax rate ranging from 20% to 30% depending on the level of income.

However, please note that tax laws and regulations can change over time. To obtain the most accurate and up-to-date information regarding corporate tax rates in the Partitioned Neutral Zone, I recommend consulting with a qualified tax professional or referring to the latest tax regulations and guidelines issued by the relevant authorities in both Kuwait and Saudi Arabia."

And moving on to tax penalties. Question: "What is the rate of income tax penalties in Kuwait?

And the answer: "As of my knowledge cutoff in September 2021, Kuwait imposes penalties for non-compliance with income tax regulations. The specific rates of income tax penalties in Kuwait can vary depending on the nature and severity of the violation.

For instance, under the Kuwaiti tax law, penalties can be imposed for late payment or non-payment of taxes, failure to file tax returns, failure to maintain proper records, providing false information, or other tax-related offenses. The penalties can include fines, interest on overdue amounts, and potential criminal charges in some cases.

It's important to note that tax laws and penalties can change over time, so it's advisable to consult with a qualified tax professional or refer to the latest tax regulations and guidelines issued by the Kuwaiti tax authorities for the most up-to-date and accurate information regarding income tax penalties in Kuwait."

And, what about personal income taxes? My question: "What is the personal income tax rate in Kuwait?" and ChatGPT's response: "As of my knowledge cutoff in September 2021, Kuwait does not levy personal income tax on individuals. There is currently no specific personal income tax rate in Kuwait. However, it's important to note that tax laws and regulations can change over time, so it is advisable to consult with a qualified tax professional or refer to the latest tax regulations and guidelines issued by the Kuwaiti tax authorities for the most accurate and up-to-date information regarding personal income tax in Kuwait."

If you would like to learn more about Large Language Models (LLMs), you may find this five-minute video illuminating

https://www.youtube.com/watch?v=iR2O2GPbB0E

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?? ???? ????? ????? ?????? ??????? ????? ??????? ????????? ??? ? ??? ????? ??????: "?? ?? ???? ??????? ???????? ?? ???????"

??? ChatGPT:

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