Kuwait has introduced a new decree-law that aims to regulate the taxation of multinational entities operating across multiple countries or jurisdictions. This tax law, approved by the Council of Ministers, imposes a 15% tax rate on such entities. The law will come into effect on January 1, 2025, and is part of Kuwait’s efforts to reduce tax evasion and ensure proper tax revenue collection.

Key Provisions of the Decree-Law

The newly issued decree-law consists of five key articles that lay the foundation for the application of the tax on multinational entities. Below are the primary details:

Article 1 - Scope and Applicability

This article stipulates that the provisions of the new law will apply to multinational entities for tax periods beginning on or after January 1, 2025. Current tax laws will no longer apply to these entities from this date.

Article 2 - Registration Period and Grace Period

The law grants multinational entities a grace period of 9 months from the date the law comes into force to apply for registration with the Tax Authority. During this period, entities will not be subject to the administrative fine normally imposed under Clause (1) of Article (34) of the current tax law.

Article 3 - Legal Priority

This article establishes that the provisions of the new tax law take precedence over any conflicting laws, ensuring clear and enforceable guidelines for multinational entities.

Article 4 - Minister of Finance’s Role

The Minister of Finance is tasked with issuing the executive regulations for the implementation of this law within six months of its publication in the Official Gazette. These regulations will provide more detailed guidance on how the law should be enforced.

Article 5 - Implementation Responsibility

The law designates the Prime Minister and Ministers to implement the provisions of the law, ensuring its enforcement beginning January 1, 2025.

Multinational Entities Tax Law in Detail

In addition to the main decree-law, the Multinational Entities Tax Law includes 41 articles divided into 8 chapters. These provisions offer a comprehensive approach to regulating the taxation of multinational corporations, focusing on various aspects such as registration, compliance, and enforcement.

What Does This Mean for Multinational Entities Operating in Kuwait?

The introduction of the 15% tax rate for multinational entities marks a significant change in Kuwait’s tax landscape. Companies operating across multiple jurisdictions will need to assess their tax liabilities and ensure compliance with the new law. By enforcing this law, Kuwait aims to address concerns of tax evasion and prevent the outflow of tax revenues to other countries.

Implementation Timeline and Key Dates

• January 1, 2025: The provisions of the new tax law will come into effect for multinational entities.
• Nine-Month Grace Period: Entities have until September 2025 to register with the Tax Authority without incurring penalties.