The Minister of Finance and Minister of State for Economic Affairs and Investments, Nora Al-Fassam, announced that the Ministry is preparing a selective taxation law aimed at levying taxes on harmful commodities. The projected revenue from this law is expected to reach KD 200 million (USD 648.3 million) annually. This is part of broader efforts to reform Kuwait’s taxation system, with significant measures also targeting corporate income taxes and multinational entities.

Selective Taxation on Harmful Commodities

Al-Fassam emphasized the government’s initiative to impose taxes on commodities that are harmful to human health, aligning with international best practices. This measure is part of Kuwait's ongoing efforts to create a healthier environment for its citizens while generating significant revenue for the economy.

Corporate Income Tax and International Taxation Reforms

One of the major steps in Kuwait’s tax reforms involves levying taxes on corporate income, particularly following the enactment of decree-into-law 6/2024, which addresses the exchange of tax-related information, and decree 157/2024, which targets multinational entities operating within the country.

Joining International Efforts Against Tax Evasion

Kuwait joined the Organization for Economic Cooperation and Development (OECD) / G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) on November 15, 2023. This move aligns Kuwait with over 140 jurisdictions in combatting international tax evasion and fostering a transparent tax system. By joining this framework, Kuwait aims to ensure fair taxation and curb profit-shifting practices by multinational corporations.

Steps Towards Transparency and International Cooperation

As part of its tax reforms, Kuwait is implementing treaties on double taxation, combating financial evasion, and establishing mutual protection agreements for investments. These measures are designed to enhance international cooperation and improve the country's tax environment.

Impact on Companies and Exemptions

Under the decree 157/2024, certain companies and entities are exempt from taxes, including government entities, non-profit organizations, international agencies, and pension and investment funds. Companies that contribute to the Kuwait Institute for Scientific Research will continue to make their financial contributions. The law also clarifies that companies will not be required to pay alms or worker taxes as stipulated in previous laws, including law 19/2000 and law 46/2006.

Expected Revenue from Multinational Entity Tax

The projected proceeds from taxes on multinational entities are estimated at KD 250 million (USD 810.6 million) annually. These taxes will be levied starting from the 2027-2028 period, with an estimated 300 entities, including 20 Kuwaiti groups and 25 Gulf-based groups, subject to the tax. The remaining entities are foreign multinational groups operating in Kuwait.

Contributing to Kuwait Vision 2035

The enforcement of these taxes is in line with Kuwait's Vision 2035, which aims to create a diversified and sustainable economy. By generating additional non-oil revenues and curbing the outflow of economic returns, these tax reforms contribute to the long-term economic stability and global competitiveness of Kuwait.

International Cooperation for Fair Taxation Practices

Minister Al-Fassam concluded by affirming that these taxation reforms would strengthen Kuwait's role in international cooperation, aligning the country with global efforts to promote fair and just taxation practices.