Kuwait’s Ministry of Finance is deciding on a draft law that will impose a 15% corporate income tax on all companies operating in the country, effective 1 January 2025. This tax will apply to both local and multinational companies, with the exception of those whose annual revenues are below KWD 1.5 million.
Additionally, a 30% tax will be levied on income derived from businesses in the “divided zone,” with a potential 50% reduction available if taxes are paid to Saudi Arabia.
The law aims to ensure that multinational enterprises (MNEs) meet a minimum effective tax rate of 15%, aligning with the OECD’s Global Anti-Base Erosion (GloBE) rules.
A 5% withholding tax will also be imposed on payments made to non-residents, including dividends, royalties, and fees for technical, consulting, and administrative services.
To comply with the new law, companies must register with the Tax Administration within 30 days of starting operations and submit annual tax returns, accompanied by audited financial statements, within six months of the fiscal year-end. Companies will be required to maintain financial records for 10 years and make quarterly advance tax payments.
Penalties for late filings or missed payments will be 1% for every 30 days of delay. Taxpayers can appeal assessments through the Tax Grievances Committee or the courts.
The new tax law will be effective from 1 January 2025, for Kuwaiti MNEs, with a two-year transitional period for other taxpayers.
