Kuwait projects 631 million dinars in taxes and fees for 2025-2026
Kuwait's budget for the 2025/2026 fiscal year projects increased tax and fee revenues, including new levies on multinational entities and harmful goods. The government is implementing measures to reduce expenses and boost non-oil revenues to address the persistent fiscal deficit.
The new fiscal year 2025/2026 budget law confirms that no fees or taxes will be imposed on total salaries, wages, or manpower. However, the total expected tax and fee revenue for the year is approximately 631.26 million dinars, reflecting an increase of 18 million dinars compared to the previous fiscal year.
An analysis of the budget reveals the following sources of tax revenue and fees.
- The budget law estimates that revenue from taxes on income, profits, and capital gains will reach approximately 185 million dinars, collected from targeted sectors, including local and foreign companies and institutions operating in Kuwait.
This will be achieved through several channels, including:
- Income Tax: A 15% annual tax is imposed on the taxable net income of each foreign entity or institution conducting business or trade in Kuwait.
- Labor Support Tax: A 2.5% tax is imposed on the annual net profits of Kuwaiti and Gulf companies listed on the Kuwait Stock Exchange.
- Zakat and Budget Contribution: A 1% annual tax on the net profits of Kuwaiti companies to support the state’s general budget.
- Dividends Tax: A 15% tax on profits generated from distribution of shares.
2. Taxes on property are expected to generate approximately 26 million dinars in the next fiscal year, as outlined in the budget law. These taxes will be collected from various property-related transactions.
3. Taxes on trade and international transactions, including duties and taxes on trade, imports, and other operations, are expected to generate approximately 420.2 million dinars in the next fiscal year, driven by anticipated growth in trade activity.
Fines and Penalties
Fines, penalties, and confiscations expected to be collected in the new fiscal year, beginning next April, have seen a sharp increase, surpassing 361 million dinars compared to the 183 million dinars projected for the current fiscal year.
The collection of taxes and fees in Kuwait is expected to grow in the coming years, particularly with the approval of the Foreign Multinational Entities Law, which is projected to generate over 250 million dinars annually from multinational entities. Additionally, the government’s plans to introduce the Selective Tax Law, targeting goods harmful to health, are anticipated to yield around 200 million dinars per year.
Budget Reform and Set Spending Cap
To address the fiscal deficit, the government has implemented measures to reform the structural imbalance in the public budget, which faces rising expenditures alongside declining revenues. It issued a directive to reduce budget expenses while maintaining the public spending ceiling and emphasized the need to maximize non-oil revenues, especially as the financial deficit persists and oil revenues remain unstable.
To address the fiscal deficit, the government has introduced measures to reform structural imbalances in the public budget, which faces rising expenditures alongside declining revenues. A directive has been issued to reduce budgetary expenses while maintaining the public spending ceiling. Additionally, there is a strong focus on maximizing non-oil revenues, particularly as the ongoing financial deficit continues to overshadow unstable oil revenues.
Source: Al Qabas
