Kuwait’s cabinet has approved the introduction of a 10 per cent tax on corporate profits as part of the wider economic reforms to plug the budget deficit amid low oil prices, according to Finance Minister Anas al-Saleh.

The minister did not say when Kuwait plans to impose the tax on corporates, which will mark a shift in policy as most Kuwaiti firms do not pay taxes on profits in oil-rich Gulf state, though many foreign firms do.

Kuwait is part of the six-member economic bloc of GCC, which accounts for about third of the world’s proven oil reserves. The Gulf States, which mainly rely on sale of hydrocarbons for revenues, are struggling to narrow their budget deficits amid a slump in oil prices. Crude, the benchmark for more than half of the world’s oil, has lost close to 60 per cent of its value since a mid-2014 peak.

Most of the GCC member states are running austerity campaigns and are looking for alternative ways to boost non-oil revenues including introduction of value-added tax, however, Kuwait is the only one that will tax corporate earnings.

The country’s cabinet had also approved a “repricing” of some commodities and public services, Reuters news agency quoted Saleh as saying at a press conference in Kuwait City. He did not elaborate on the repricing and wheter it will affect fuel, food and public utilities.

Officials have previously said they are considering such cuts, as the subsidies cost the government billions of dollars annually.

Saleh also said that the government would seek to privatise state-owned assets including airports, ports and some facilities of national oil giant Kuwait Petroleum.

In a report to the cabinet, he outlined other reforms including allowing private citizens to own as much as 50 per cent of public-private joint ventures, reforming the labour market and the civil service system, and making the public sector more efficient by linking pay to production, state news agency Kuna reported.

Kuwait is expected to run a budget deficit of KD12.2bn ($40.7bn) in the fiscal year starting on April 1 due to lower oil prices, nearly 50 percent higher than the deficit estimated for the current year, after government contributions to the sovereign wealth fund, according to the finance ministry projections in January

The emir has urged the cabinet and parliament to cut spending, and the central bank governor warned this week that authorities might have to change monetary policy if the deficit was not cut, according to Reuters.