Kuwait’s tax system is one of the most favorable in the world, with no personal income, inheritance, gift, or wealth taxes. Local businesses also benefit from zero corporate tax, while foreign companies face a flat 15% rate. Despite the lack of formal anti-avoidance rules, Kuwait maintains global financial transparency through its extensive Double Tax Treaty (DTT) network and compliance with CRS and FATCA.
Kuwait’s Tax System overview
| Corporate Income Tax: | None |
| Personal Income Tax: | None |
| Inheritance Tax: | None |
| Gift Tax: | None |
| Wealth Tax: | None |
Legal System
Kuwait is a constitutional sovereign state, which applies a mixture of Civil Law and Sharia in family matters for Muslims.
Currency and Foreign Exchange Controls
The currency is the Kuwaiti Dinar. Kuwait has no foreign exchange controls.
Personal Income Taxation
Kuwait does not impose income tax on individuals, or gift, inheritance or wealth tax.
Corporate Income Tax
Kuwait does not impose corporate income tax on companies wholly owned by nationals of Kuwait or the GCC. Foreign corporations are subject to corporate income tax at 15%, except where fully owned by Kuwaiti or GCC citizens. Foreign shareholders (non GCC) are subject to tax to the extent of their ownership. Kuwaiti companies must pay Zakat of 1% of net profits.
Value Added Tax (VAT)
Kuwait is expected to implement a VAT on goods and services at 5% in April, 2021.
Anti-Avoidance Rules
Kuwait does not have general Anti-Avoidance Rules (GAAR). In addition, Kuwait does not have formal Transfer Pricing rules, Thin Capitalization rules or Controlled Foreign Corporation (CFC) rules.
Double Tax Treaties (DTTs)
Kuwait has a broad network of DTTs, including with Austria, Belgium, Canada, China, Cyprus, Denmark, France, Germany, India, Ireland, Italy, Japan, Korea, Lebanon, Malta, Mauritius, Netherlands, Russia, Singapore, Spain, South Africa Switzerland, and the United Kingdom.
OECD Multilateral Convention
Kuwait has also ratified the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, as amended by Protocol (2010). The Convention requires parties to exchange information “on request,” and allows parties to agree spontaneous and automatic exchange.
Common Reporting Standard (CRS)
Kuwait executed the Multilateral Competent Authority Agreement (MCAA) and has implemented automatic exchange under CRS.
FATCA
Kuwait has a FATCA Model 1 IGA in effect with the United States.
