Taxation
There is no corporate income tax for companies which are fully owned by citizens of Kuwait and other GCC countries. But foreign companies operating in the region have to pay tax accounting for the share of foreign ownership. Any foreign company operating in Kuwait solely or through an agent have to pay tax on its capital gains and profit.
Any activity that gives rise to income in Kuwait will be subjected to the taxation rules of the country. For any activity conducted both inside and outside the borders of Kuwait, the whole income has to be reported for tax calculation in Kuwait including the amount generated outside the country.
Kuwait charges a flat rate of 15% corporate income tax for foreign countries. Foreign companies operating in the offshore region of the partitioned neutral zone regulated by Saudi Arabia are liable to pay 50% tax in Kuwait on the taxable profit.
Other taxes include the Zakat which is charged at 1% on net profit for all closed and publicly traded shareholding companies in Kuwait. Companies also have to pay 1% of the net profit to the Kuwait Foundation for the Advancement of Sciences (KFAS).
Holistic Tax Advice and Consultation
The New Tenders Law (Law. No 49 of 2016) replaced the Tender Law No. 37 of 1964 which regulated the public tenders in Kuwait. Through the new laws, the system has been modernized to make it more flexible and hassle-free. Even foreign businesses are now able to take part in government contracts in a bid to make Kuwait a leading commercial and financial hub by the year 2040.
But still, there are many considerations to keep in mind while going for a government project. Other laws such as the Direct Investment Law (Law No. 116 of 2013) also come into play and have to be considered. There are also many regulations to follow for both domestic and foreign businesses.
For example, a foreign contractor must source at least 30% of the contractual requirements from local suppliers and the domestic market. On top of that, you have to consider and abide by all 97 Articles detailed in the Public Tenders Law.
Implications of Kuwait Taxation System
Kuwait has a positive taxation structure which encourages organizations to take part in the economy. The government of Kuwait charges corporate income tax and other taxes based on the type of the company.
Implications of Kuwait Taxation System
Lawyer Sultan Al-Shemali Law Firm provide professional consultation regarding the implications of taxation in Kuwait which are applicable to different types of companies. We also guide foreign companies and foreign nationals doing business in Kuwait on various tax issues that they encounter. We also help clients file their taxes in all jurisdictions according to the laws of the country.
Our adept lawyers can deliver effective advice and tax planning on existing and future contracts. They are fully aware of all the tax laws and regulations so that you get accurate advice and assistance on filing your taxes. We also help you to register with the tax department ensuring a hassle-free process.
Clients can stay informed of their tax exposures as our team will review your accounts and financial documents. We can also submit different supporting schedules such as Arabic tax declaration on your behalf and participate in tax inspections to answer all questions of the tax inspector.
We will also attend meetings with the appeal committee and tax objection authorities. We can obtain various legal and tax documents on your behalf such as tax assessment report, no objection letter and clearance certificate from the Kuwait tax department.
Our lawyers are always up to date with the tax laws and executive regulations and excel in proactive planning. They will come up with effective strategies and implement them to make sure you don’t end up paying anything extra than you need to.
We will always work with you to keep you informed about all the tax nuances and how they might affect your business in the long run.
