Even in competitive marketplaces, effective tax planning may provide businesses a competitive edge when pursuing development and expansion. Organizations are becoming more aware of the significance of handling transfer pricing difficulties, managing taxes and addressing company structure issues.
Net yearly earnings are used to determine tax liability, which is backed by locally generated and audited financial statements that have been depreciated and have had things prohibited by the tax authorities during a tax inspection taken into account. The tax authorities have broad discretion to ignore the actual accounts and calculate presumed earnings for the purposes of determining the tax due based on purported shortcomings in local accounting or the tax statement supporting paperwork.
The state of Kuwait mainly focuses on Corporate (Company) tax. According to the Decree No. (3) of 1955 as amended by Law No. (2) of 2008 and its Executive Regulations regulates Kuwait Income Tax on foreign companies, " The state of Kuwait imposes a tax on income earned by foreign companies operating in the state of Kuwait 15% of the annual net profits." There are other taxes in Kuwait as well such as Zakat, Royalties, NLST (National Labor Support Tax), Capital Gains Tax etc.
Zakat is computed at 1% of annual net profit before Board of Director's remuneration, contribution to Kuwait Foundation for Advancement of Sciences, donations, grants, Zakat and NLST.
National Manpower Tax is 2.5% of yearly net income, less specific dividends and profit shares, and it only applies to Kuwait shareholding businesses listed on the Kuwait Stock Exchange.
There are no withholding taxes in Kuwait. However, the local franchisee/licensee in Kuwait would deduct and retain 5% from royalty/license payments in accordance with the Kuwait tax retention regulations (these deductions would not be remitted to the Kuwait Tax Authority (KTA)).
All international businesses operating in Kuwait are subject to taxation on profits made from their operations, with the exception of those established in neighboring Gulf states and owned entirely by citizens of the GCC or GCC corporations themselves. Along with passive investment income, this also refers to direct revenues in Kuwait. Obtaining tax cards and registering with the tax authority are additional requirements. One of the main benefit or reasons is to Avoid Double Taxation. Kuwait has entered into tax treaties with several countries to avoid double taxation.
In Alkhuzam & Co. - Morison Global, we respond to your issue with an international mindset and offer tax payment services along with providing the certificates required for Tax Clearance. We make sure that all the country procedures are adhered with and contribute to preparing the Zakat return.