KUWAIT: Kuwait is advancing its tax reform agenda with the development of a new selective tax law aimed at harmful goods such as tobacco and sugary beverages. This law is projected to generate approximately KD 200 million (around $648 million) in annual revenue, marking a significant step in the government’s broader efforts to diversify non-oil income sources.
In an interview with Kuwait News Agency (KUNA), Minister of Finance and Minister of State for Economic Affairs and Investment, Noura Al-Fassam, confirmed that the Ministry of Finance is actively working on the selective tax law as part of a comprehensive strategy to reduce Kuwait’s reliance on oil revenues. This initiative aligns with the country’s long-term economic objectives, including the Kuwait Vision 2035.
Corporate tax
Beyond the selective tax law, Al-Fassam emphasized the ministry’s focus on other critical tax reforms, including the corporate income tax law, which will apply to businesses operating in Kuwait. These reforms are designed to provide a more sustainable and diversified revenue stream for the country.
Al-Fassam also highlighted Kuwait’s recent membership in the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS), which includes over 140 countries. This development is a vital step toward enhancing global tax cooperation, combating tax avoidance, and promoting transparency within Kuwait’s tax system.
Multinational tax
The selective tax law forms a key component of a broader legislative package that includes agreements to prevent double taxation and promote international tax cooperation. The multinational entity tax law is expected to generate approximately KD 250 million (about $810 million) annually, with implementation slated for the 2027-2028 period.
Entities subject to the new law will be exempt from paying the labor support tax under Law No. 19 of 2000 and the zakat tax under Law No. 46 of 2006 for tax periods beginning January 1 of this year. Additionally, companies contributing to the Kuwait Foundation for the Advancement of Science will still be required to make payments, as the multinational tax law does not offer exemptions in this regard.
As for the entities excluded from the law, Minister Al-Fassam clarified that government entities, non-profit organizations, international organizations, pension funds, and investment funds are not subject to the tax, in accordance with the established criteria. She also noted that the initial assessment of entities subject to the new tax law includes around 300 groups, consisting of 20 Kuwaiti groups, 25 Gulf-based groups, and 255 foreign entities operating within Kuwait. — KUNA
The Ministry of Finance has organized a series of workshops with key stakeholders, including the Ministry of Justice, the Ministry of Commerce and Industry, and the Kuwait Capital Markets Authority, to discuss the new tax provisions. Additionally, the ministry plans to hold more detailed workshops and create a dedicated email address to address any questions related to the new laws. — KUNA