While the expected date of ratification and entry into force of the treaty is awaited, the signing of the tax treaty between Kuwait and KSA hints at the expected implementation of corporate income tax (CIT) in Kuwait, which will impact both Saudi businesses operating in Kuwait and Kuwaiti businesses operating in KSA.
As noted in our earlier alerts, a potential two-phased approach to the introduction of CIT is expected in Kuwait. The first phase would target multinational companies with revenues over EUR 750 million (approx. KD 250 million), and the second phase will be applicable to all Kuwaiti companies. This is expected to include a wide range of operating structures, including corporate entities, partnerships, and other businesses with separate legal existence. However, individuals and small and medium-sized entities are initially expected to be exempt from the tax law.
Kuwait currently has a 15% CIT regime applicable to foreign (non-GCC) corporate entities. However, with the changes in the region, we expect that local legislation will be updated to align with the standards being followed across other GCC countries.
