A 15% business tax on profits has been suggested by Kuwait State Ministry of Finance and is scheduled to go into effect in 2025.
KUWAIT: The proposed Business Profits Tax Law introduces a 15% tax rate on corporate profits starting January 1, 2025, targeting both local and multinational companies. However, smaller enterprises with annual turnovers under 1.5 million Kuwaiti dinars and state-owned entities will be exempt.
The law also outlines a phased implementation, with additional businesses brought under the tax net by 2027. Companies must register with the Tax Administration within 30 days of commencing operations and file annual tax returns, including audited financial statements, within six months of the fiscal year-end.
Multinational corporations with effective tax rates below the global minimum of 15% will face a supplementary tax, ensuring compliance with international standards. Furthermore, specific payments to non-residents—such as dividends, royalties, and technical services—will be subject to a 5% withholding tax unless tied to permanent establishments in Kuwait.
A higher tax rate of 30% will apply to certain income from divided zones, with reduced rates for taxpayers who meet Saudi Arabia’s tax obligations. Companies can deduct salaries, depreciation, and prior-period losses within prescribed limits, offering some financial relief.
The law emphasizes strict compliance, requiring businesses to maintain financial records for 10 years and adhere to quarterly advance tax payments. Late filings or missed payments will incur penalties of 1% for every 30 days of delay. Taxpayers may challenge assessments through an appeal process, escalating disputes to a Tax Grievances Committee or courts if necessary.
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