On December 24, 2024, the Kuwaiti Cabinet approved a draft law introducing a 15% corporate tax on multinational corporations operating across multiple jurisdictions. This initiative is part of Kuwait’s ongoing efforts to align its tax framework with global standards and foster greater economic transparency. The law will take effect on January 1, 2025, following a transitional period to allow affected entities to comply with the new requirements.

The resolution was passed during the Cabinet’s weekly session at Bayan Palace, chaired by His Highness the Prime Minister Sheikh Ahmad Abdullah Al-Ahmad Al-Sabah. The measure aims to enhance Kuwait’s fiscal structure, curb tax evasion, and discourage profit-shifting to low-tax jurisdictions—a practice that undermines global tax equity. By imposing this tax, Kuwait signals its commitment to supporting the international agenda on fair and sustainable corporate taxation.

Exemptions and Scope
While the new corporate tax is primarily targeted at multinational corporations meeting specific criteria (like annual revenue exceeding Euro 750 million) , the draft law that was publicly circulated earlier also included provisions for taxing local businesses and small-to-medium enterprises (SMEs) with annual revenues exceeding KD 1.5 million. However, the issued law appears to omit this provision, leading to ambiguity regarding its applicability to local entities. Further clarification on this matter is anticipated in the coming weeks.

Government’s Vision
Deputy Prime Minister and Minister of State for Cabinet Affairs, Shereeda Al-Mousherji, affirmed that this legislative step underscores Kuwait’s proactive stance in modernizing its economic policies. “The decision reflects Kuwait’s commitment to international cooperation in addressing tax avoidance practices while ensuring fairness and sustainability,” she stated.

The implementation of this law aligns with global initiatives such as the OECD’s Base Erosion and Profit Shifting (BEPS) framework, which advocates for transparency and consistency in corporate tax regulations. It also positions Kuwait as a forward-looking participant in fostering a balanced and transparent global economy.

This corporate tax reform is expected to strengthen Kuwait’s fiscal resilience, bolster investor confidence, and support the nation’s long-term economic diversification goals in line with Vision 2035.

How you can prepare
Contact us today to discuss how your business can prepare to minimize the impact of this tax and ensure full compliance with the new regulations. Our tax professionals are here to provide guidance tailored to your needs and help you navigate this transition smoothly.