Kuwait, 9 December, 2024 : Kuwait is set to implement a 15% Corporate Income Tax starting in 2025, as part of sweeping fiscal reforms proposed by the Ministry of Finance. The draft of the Business Profits Tax Law targets both local and multinational businesses, but exempts smaller businesses with annual turnovers under 1.5 million Kuwaiti dinars.
The tax will apply to profits earned from January 1, 2025, with full implementation extending to additional businesses by 2027. State-owned companies will be exempt, and a higher tax rate of 30% will apply to specific income from divided zones. Multinational corporations with effective tax rates below the 15% minimum will face a supplementary tax.
A 5% withholding tax will be applied to payments made to non-residents, such as dividends and royalties, unless linked to permanent establishments in Kuwait. Companies must register with the Tax Administration and submit tax returns within six months of the fiscal year-end. Quarterly advance payments will be required from 2026.
The tax law allows deductions for prior-period losses, salaries, and other expenses, with businesses required to retain financial records for 10 years. Penalties will be imposed for late filings, and the Tax Administration can seek court orders to seize assets for unpaid tax debts.
These reforms aim to modernize Kuwait’s fiscal framework, ensuring compliance with international tax standards while promoting business transparency and fairness.
Source : www.gulfnews.com
