The Ministry of Finance has officially stated that there are no plans to impose taxes on citizens. In terms of major Kuwaiti companies, the Ministry disclosed that their situation is currently under evaluation in accordance with the established guidelines of the second pillar. It is suggested that the prescribed tax rate for entities falling under these guidelines will be set at 15 percent.
This clarification from the Ministry of Finance comes in response to a parliamentary inquiry from MP Hamad Al-Matar and in reaction to a news article published in “Al-Rai” on October 24, which stated, “The government is exploring a comprehensive tax project that does not affect citizens or small projects.”
The Ministry clarified that the government’s efforts in this direction are in line with implementing recommendations and regulations from the Organization for Economic Cooperation and Development (OECD). These recommendations call for the imposition of a minimum level of taxes on large multinational companies to prevent tax avoidance and encourage them to operate in countries with lower tax rates.
The Ministry of Finance confirmed that the targeted tax rate for major Kuwaiti companies is 15 percent, emphasizing that there is no international pressure on Kuwait, and its approach aligns with international recommendations.
The Ministry stated that it is currently examining the situation of major Kuwaiti companies falling under these rules to determine the best approach that serves Kuwait’s public interest.
One potential option being considered is the introduction of local tax legislation that incorporates the rules of the second pillar, ensuring that taxes owed by major Kuwaiti multinational companies are collected for the benefit of the national treasury rather than being paid abroad and then subject to local deductions. This strategy is in accordance with recommendations discussed during the Coordinating Committee for Enhancing Non-Oil Revenues.
The Ministry stated that the following tax laws apply to Kuwaiti joint stock and closed companies:
1 – Law No. (46) of 2006 regarding zakat and the contribution of closed public companies to the state budget.
2 – Law No. (19) of 2000 regarding supporting national workers and encouraging them to work in non-governmental agencies.
Regarding Al-Matar’s question about whether the government is unable to provide appropriate economic alternatives to cover the economic deficit instead of the citizen’s pocket, the Ministry of Finance reiterated that there is no intention to impose any taxes on citizens and that the targeted tax comes within international requirements and recommendations on a specific segment of companies. Specifically, the largest ones covered by the rules of the second pillar set by the Organization for Economic Cooperation and Development (OECD).
In accordance with the organization’s regulations, the specific tax scope applies to multinational corporations with annual revenues not less than 750 million euros. This implies that several Kuwaiti companies fall within this scope, particularly those operating in multiple international markets. As a result, citizens and small-scale projects are exempt from this taxation.
Sources have suggested that the anticipated tax framework will be implemented in two phases. The first phase, commencing on January 1, 2025, will cover major international multinational companies while the existing tax laws continue to be enforced. The second phase, set to begin on January 1, 2026, will involve comprehensive application to all legal entities, accompanied by the repeal of the existing tax laws.
It is worth noting that corporate tax is one of the 14 priorities presented by the government to the Parliamentary Coordination Committee for inclusion in the legislative agenda of the National Assembly session, which commenced on October 31 last year.
The sources have indicated that the government’s efforts in this regard encompass recommending the enactment of a tax procedures law. This law would encompass all procedural provisions regulating the implementation of various types of taxes.
Currently, this project is under consideration, and tax awareness campaigns are expected to be launched three months after contracting with the consultant. An integrated automated system is also being prepared in conjunction with the tax administration development project.
Additionally, sources have disclosed that the Council of Ministers is evaluating the establishment of suitable frameworks for policies related to the global minimum tax on corporations, as proposed by the Organization for Economic Cooperation and Development (OECD). A dedicated working team within the tax administration will collaborate with the consultant on the assigned tasks.
Furthermore, following the government’s recommendation to introduce legislation for the collection of taxes owed to the public treasury, it is anticipated that a higher committee will be formed to develop appropriate frameworks for corporate tax policies.
This committee is expected to comprise representatives from the Ministries of Finance, Justice, Commerce and Industry, the Kuwait Petroleum Corporation, the Kuwait Chamber of Commerce and Industry, the Direct Investment Promotion Authority, and the Kuwait Banking Association.
