Tax in GCC
- Overview of tax in GCC
- Taxes in UAE
- Taxes in Saudi Arabia
- Taxes in Qatar
- Taxes in Oman
- Taxes in Kuwait
- Taxes in Bahrain
Taxes in Kuwait
There are no excise taxes in Kuwait.
Currently, Kuwait does not impose VAT in its territory. Kuwait plans to introduce VAT at 5 % in 2021.
There is no personal income tax system prevail in Kuwait either on salaries or on income from business activities.
Social Security Contributions
For Kuwaiti employees, contributions are payable monthly by both the employer and employee under the Social Security Law. The employer’s contribution is 11.5% and the employee’s is 8% of monthly salary, up to a ceiling of 2,750 Kuwaiti dinars (KWD) per month. Benefits provided include pensions on retirement and allowances for disability, sickness, and death.
In addition to the above contributions, the employee must contribute 2.5% of their monthly salary, up to a ceiling of KWD 1,500 per month, under the Social Security Law.
There are no social security obligations for expatriate workers. However, for foreign employees, it is generally necessary to make terminal indemnity payments calculated at 15 days’ pay-per-year for the first three years of service and 2/3 month’s pay-per-year thereafter.
National Labour Support Tax (NLST)
The purpose of the NLST law is to encourage the national labour force to work in the private sector by closing the gap in salaries and benefits between public and private sectors.
As per the law, Kuwaiti companies listed in the Kuwait Stock Exchange (KSE) are required to pay an employment tax of 2.5% of the company’s net annual profits.
Corporate (Company) Tax
The Corporate Tax Rate in Kuwait stands at 15 %.
Foreign companies carrying on trade or business in the offshore area of the partitioned neutral zone under the control and administration of Saudi Arabia are only subject to tax in Kuwait on 50% of their taxable profit under the law.
Double Taxation Treaties
Kuwait has entered into tax treaties with several countries, for avoidance of double taxation. Kuwait is a signatory of the Arab Tax Treaty and the GCC Joint Agreement, both of which allows for avoidance of double taxation in most areas. Comprehensive double taxation treaties are available with Austria, Belarus, Belgium, Canada, China, Cyprus, Croatia, Ethiopia, France, Germany, Hungary, Indonesia, Italy, Jordan, Korea, Lebanon, Mauritius, Mongolia, Netherlands, Pakistan, Poland, Romania, Russia, Serbia and Montenegro, Singapore, Switzerland, Syria, Tunisia, Turkey, Ukraine and United Kingdom.
The Algeria and South Africa treaties are under finalization. Kuwait has also concluded limited double taxation agreements in respect of income arising from international sea and/or air transport with several countries. Foreign companies which are subject to treaty exemptions are still required to file their tax declarations in order to claim such exemptions.
Capital Gains Tax
Capital gains derived from the sale of assets are treated as normal business profits and subject to income tax at the standard rate of 15%.
Property Transfer Tax
There are no property taxes in Kuwait.
There is no inheritance tax.
Zakat is imposed on all publicly traded and closed Kuwaiti shareholding companies at a rate of 1% of the companies’ net profits.
All Kuwaiti shareholding companies are required to pay 1% of their net profits as per their financial statements, after transfer to the statutory reserve and the offset of losses carried forward, to the Kuwait Foundation for the Advancement of Sciences (KFAS), which supports scientific progress.
There is no stamp duty.
Kuwait officially approved the Single Customs Tariff on April 1, 2003, thereby setting a 5% import duty (CIF) on most goods. Exempt from the Single Customs Tariff are certain basic foodstuffs and medicines or medical items, which are duty free. Tobacco products are assessed a 100% duty.
Withholding Tax in Kuwait
Kuwaiti tax law does not impose withholding tax. However, all public bodies and private entities are required to retain 5% from the contract, agreement, or transaction value or from each payment made to any incorporated body until presentation of a tax clearance certificate, by the recipient of such payment from the Ministry of Finance (MoF), confirming that the respective company has settled all of its tax liabilities in Kuwait. The final payment should not be less than 5% of the total contract value.