Kuwait Court of Cassation principle number 317

Summary: - The finality of an administrative decision. Its meaning: the decision is not subject to approval by another administrative authority. This characteristic is necessary for the admissibility of an annulment action and does not preclude judicial review of it. - A final administrative decision. Its nature. A decision not subject to approval by another administrative authority, carrying within itself the elements of its enforceability, which must thereafter be applied. - Assessment of tax on the annual profits of Kuwaiti companies listed on the Kuwait Stock Exchange. Its manner. - Companies may object to and challenge the assessment within thirty days from the date of their notification by the assessment letter. The assessment becomes final either upon expiry of the period for objecting to the assessment, or upon an objection being submitted within the time limit and expressly or implicitly rejected without the rejection decision being challenged before the Tax Appeals Committee within the prescribed time limit, or upon its being challenged and the Committee issuing its decision rejecting the challenge. Consequence. The tax assessment becomes final. This decision is subject to review by the administrative judiciary. Rule: It is established that the finality of an administrative decision does not preclude its judicial review, whether by a request for its annulment or for compensation in respect thereof, whatever defect affected it during its formation. Indeed, finality in an administrative decision is necessary for the admissibility of an annulment action. Its finality means that the decision is not subject to approval by another administrative authority, carrying within itself the elements of its enforceability, which must thereafter be applied. The legislature required this characteristic in administrative decisions that individuals or bodies may challenge, as provided in item (Fifth) of Article (1) of the aforementioned Law Establishing the Administrative Circuit. That being so, and as the first paragraph of Article (12) of the aforementioned Law No. 19 of 2000 provides that “To clarify the resources necessary for implementing the provisions of this Law: 1- A tax of 2.5% of net annual profits shall be imposed on Kuwaiti companies listed on the Kuwait Stock Exchange ...”, and Article One of Ministerial Decision No. 24 of 2002 concerning the rules for collecting the tax prescribed by the aforementioned Law provides that “The tax prescribed by the aforementioned Law No. 19 of 2000 shall be set at 2.5% of the net annual profits of Kuwaiti companies listed on the Kuwait Stock Exchange, whether or not these profits are distributed to shareholders”, and Article Four of Ministerial Decision No. 5 of 2004 amending certain provisions of Ministerial Decision No. 24 of 2002 concerning the rules for collecting the tax prescribed by Law No. 19 of 2000 provides that “The text of Article Four of the aforementioned Ministerial Decision No. 24 of 2002 shall be replaced by the following text: ‘Companies subject to the provisions of the aforementioned Law No. 19 of 2000 must submit a statement of their net profits and the amount of tax due, accompanied by a copy of the approved balance sheet and final accounts, to the Tax Liability and Planning Department. They must also pay the amount of tax stated in the statement before or during the fifteenth day of the fourth month following the end of the taxable period for which the statement is submitted’”, and Article Five of Ministerial Decision No. 4 of 2002 provides that “The Tax Department shall have the right to examine the statement referred to in the preceding Article and review it in light of its supporting documents and all evidentiary facts. It may amend it or decide to calculate the tax by estimation. In the event of amendment of the statement or assessment of the tax, the company may object to and challenge this within thirty days from the date of its notification by the assessment letter, in accordance with the procedures and rules prescribed by the aforementioned Ministerial Decisions Nos. 16 of 1997 and 73 of 1998”, and the first item of Ministerial Decision No. 16 of 1997 concerning taxpayers' objections to tax assessments provides that “The taxpayer may object to the tax assessment within sixty days from the date of notification by the assessment letter. If the said period expires without an objection, the tax assessment shall become final and payable, and the taxpayer must pay it to the Tax Department within the thirty days following the assessment's becoming final.” Item Third of the same Decision also provides that “If the taxpayer's objection is expressly or implicitly rejected, the taxpayer may challenge the rejection decision before the Tax Appeals Committee within thirty days running from the date of notification of the rejection of the objection or from the date of expiry of the period for deciding the objection without a response. The challenge shall be made by an application submitted to the said Committee, accompanied by all supporting documents.” This means that whenever the tax has been assessed in the manner indicated by those provisions and the assessment has become final, whether upon expiry of the period for objecting to the assessment, or upon an objection being submitted within the time limit and expressly or implicitly rejected without the rejection decision being challenged before the Tax Appeals Committee within the prescribed time limit, or upon its being challenged and the Committee issuing its decision rejecting the challenge, the tax assessment becomes final. Accordingly, the tax assessment decision in this case is subject to review by the administrative judiciary.