Kuwait ratifies tax agreements with new international partners

• The agreements aim to attract investment to Kuwait by offering tax clarity and clearly defining investor responsibilities. They will also protect Kuwaiti investors abroad and help combat tax evasion, which harms many economies.

Kuwait has ratified several tax agreements with various countries and organizations as part of ongoing efforts to enhance its tax systems through the Ministry of Finance. Recently, decrees were issued to approve laws aimed at avoiding double taxation between Kuwait and both Saudi Arabia and the UAE.

Decrees for similar agreements with Iraq and South Africa are set to be issued today. Additionally, a protocol with the Swiss Confederation has been approved to amend the existing agreement between the two countries, which seeks to prevent double taxation on income and capital without creating loopholes for tax avoidance, evasion, or reduction, according to Al Qabas newspaper.

Agreements to help attract investments to Kuwait

Relevant sources indicated that the agreements would help attract numerous investments to Kuwait, particularly by providing tax clarity and clearly defining investors’ tax responsibilities. These agreements will also protect Kuwaiti investors in the partner countries and combat tax evasion, which causes significant economic harm to many nations.

In the same context, a decree was issued approving an agreement between Kuwait and Iraq to avoid double taxation and prevent financial evasion concerning taxes on income and capital. To strengthen mutual economic relations between the governments of Kuwait and Iraq, an agreement was signed to avoid double taxation and prevent financial evasion with respect to taxes on income and capital.

Article 1 of the agreement stated that it applied to persons residing in one or both of the contracting states, while Article II outlined the taxes covered by the agreement, which included dividends.

Kuwait-Iraq tax deal excludes artists, broadcasters, and athletes from double taxation

The agreement also stipulates the exchange of information between the competent authorities of the two states regarding the implementation of its provisions, with the condition that any information received by a state is treated as confidential.

Additionally, the decree on the avoidance of double taxation and the prevention of financial evasion between Kuwait and Iraq excludes income earned by a resident of a contracting state as a theater or cinematographic artist, radio or television broadcaster, musician, or sportsman, as these categories may be taxed in the other contracting state.

Sharia taxes

Decree-Law No. 99 of 2024 was issued, approving Kuwait’s accession to the Union of Tax Authorities in Islamic Countries and its Articles of Association. The explanatory note stated that “joining the organization aims to facilitate the improvement of tax management and strengthen the imposition of taxes in accordance with Islamic law, particularly in reference to zakat in Islamic countries. This is intended to address the accelerating global challenges, provide a forum for discussion and exchange of experiences, and develop tax policies and zakat administration in all aspects within member countries. It also seeks to encourage cooperation and mutual assistance between tax authorities in member countries and to enhance the significant role of zakat and tax management in promoting economic development.

The following are the objectives of the Union of Tax Authorities in Islamic Countries:

• Organizing meetings on taxes and zakat to exchange views and experiences.
• Conducting courses, workshops, and training sessions on the nature of tax and zakat systems.
• Collecting, analyzing, and disseminating information on tax and zakat-related issues.
• Directly providing or cooperating to facilitate bilateral and inter-committee work, offering technical assistance and research in the field of tax administration.
• Hosting conferences to enhance the capabilities of tax and zakat departments by fostering cooperation among Islamic member states.
• Keeping all Islamic countries informed about developments in tax regulations in non-Islamic countries, as well as the activities of regional tax associations.
• The Confederation is not authorized to adopt any recommendations or official public declarations concerning the tax and zakat policies of any country.