Kuwait’s Ministry of Finance has unveiled a draft law proposing a landmark 15 per cent corporate income tax, marking the Gulf country’s most significant tax reform in recent history, with implementation planned for early 2025.
The comprehensive reform, detailed in the draft Business Profits Tax Law, will primarily target multinational companies operating in Kuwait and Kuwaiti firms with international operations, whilst exempting businesses with annual turnover below 1.5 million dinars ($4.9 million).
The legislation establishes a phased implementation approach, with multinational groups facing initial tax obligations from January 2025, though advance payments will not commence until 2026. The broader application of the tax regime is set to begin in January 2027.
State-owned entities will enjoy full tax exemption, while income from the divided zone shared with Saudi Arabia will attract a 30 per cent rate, reducible by half if companies have already paid Saudi taxes.
Key features of the draft law include:
- A 5 per cent withholding tax on certain payments to non-residents
- Mandatory registration within 30 days of business commencement
- Quarterly advance tax payments
- Tax return submissions within six months of the fiscal year-end
- Loss carry-forward provisions for up to five years
The draft also establishes a Tax Grievances Committee to handle disputes, with taxpayers granted 60 days to challenge assessments.
Late payments will incur a 1 per cent penalty for every 30-day delay, reflecting the government’s commitment to strict enforcement.
The reform comes as Kuwait seeks to diversify its revenue streams beyond oil income, following similar moves by other Gulf nations to modernise their tax systems.
Follow us on
