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Corporate Tax in Kuwait

What Every Foreign Company Must Know

5/19/20253 min read

As Kuwait continues to attract foreign investment, understanding the local tax environment is crucial for international businesses planning to operate in the country. While Kuwait is considered a low-tax jurisdiction, there are important nuances in its corporate tax structure, especially for foreign entities. Here's what every foreign company must know about corporate tax in Kuwait.

1. Who is Subject to Corporate Tax?

Under Kuwait Income Tax Decree No. 3 of 1955, as amended by Law No. 2 of 2008, foreign companies operating in Kuwait are subject to corporate income tax on income derived from Kuwait. This applies to any business activity involving foreign ownership or participation.

Key point: Only the foreign share of income is taxed. Kuwaiti partners in joint ventures are not taxed on their share under the income tax framework.

5. Withholding Tax and Retention

Although Kuwait does not levy a formal withholding tax, the Ministry of Finance enforces a 5% retention from payments to foreign contractors and service providers. These amounts are withheld until tax clearance is obtained.

Important: Failure to obtain a tax clearance certificate can result in delayed payments and difficulties in repatriating funds.Companies within the DMTT framework should not assume that DMTT registration removes retention requirements. Confirm whether any exemption applies to your case.

Blog Author: Afwaz Alkhuzam

8. Zakat, National Labor Support Tax and KFAS

7. Double Taxation Treaties (DTTs)

6. Tax Filings and Deadlines

Foreign entities must file an annual tax declaration with the Kuwait Tax Department within 3.5 months after the end of the financial year. Extensions can be requested.

Documentation typically required includes:

Audited financial statements
Details of contracts
Proof of expenses and deductions
Groups within the DMTT scope must also meet separate registration, reporting and payment requirements.

Kuwait has signed DTTs with several countries, including the UK, France, India, and others. These treaties can help foreign companies avoid being taxed twice on the same income and may offer reduced tax rates on certain types of income.

These are additional levies that apply to Kuwaiti shareholding companies, not to foreign companies. Zakat is generally 1% of applicable net profits, the National Labour Support Tax (NLST) is generally 2.5% for qualifying listed companies, and the KFAS contribution is generally 1%. Which ones apply depends on the company's legal status.

Final Thoughts

Kuwait's corporate tax regime is relatively straightforward but highly specific to foreign companies, and the DMTT adds a new layer for large multinational groups. Proactive tax planning, proper documentation, and compliance with filing deadlines are crucial for operating smoothly in Kuwait. Before setting up operations, consult a local tax advisor to make sure you meet all obligations and make the most of any treaty benefits.

To contact a Tax advisor from our firm, kindly reach us on:

info@alkhuzam.com | +965 22414000 | +965 66162610

Located at: KIPCO Tower, Sharq, Kuwait

2. Corporate Tax Rate

The standard corporate income tax rate in Kuwait is 15% on net taxable income. This flat rate applies regardless of the type or size of the business.

3. Scope of Taxable Income

Taxable income includes (but is not limited to):

Profits from contracts carried out in Kuwait
Consultancy fees
Income from leasing equipment or services

Even if a foreign company does not have a permanent office in Kuwait, it may still be taxed on income generated from Kuwait-sourced activities.

4. Domestic Minimum Top-Up Tax (DMTT)

Kuwait introduced the DMTT under Decree-Law No. 157 of 2024, effective for fiscal years beginning on or after January 1, 2025. Implementing regulations were issued under Ministerial Resolution No. 55 of 2025.

The DMTT generally applies to multinational enterprise (MNE) groups with consolidated annual revenue of at least €750 million in at least two of the four preceding fiscal years, subject to applicable exclusions and conditions. Its aim is to ensure a 15% minimum effective tax rate on relevant income.

Important: Qualifying groups should assess their eligibility, complete the required registration, keep supporting financial records, and confirm their filing and payment obligations with the Kuwait Ministry of Finance.