The introduction of Kuwait’s Domestic Minimum Top-Up Tax (“DMTT”), effective 1 January 2025, represents a pivotal transformation in the country’s corporate tax environment. The DMTT imposes a 15% effective tax rate on in-scope multinational enterprise (MNE) groups with consolidated revenues of at least EUR 750 million in at least two of the preceding four years. For the first time, Transfer Pricing (TP) principles are formally embedded within the domestic tax framework, aligning Kuwait with the OECD’s Global Minimum Tax (Pillar Two) initiative.
Historically, transfer pricing in Kuwait operated within a less structured environment, with limited formal documentation requirements. The Kuwait DMTT Law fundamentally changes this dynamic, where Transfer pricing is no longer a just a compliance consideration — it now directly influences taxable income, effective tax rate (ETR) calculations, and potential top-up tax exposure at a global level.
For multinational enterprise (MNE) groups operating in Kuwait, the first year of implementation will serve as a foundational phase — requiring the establishment of structured TP policies, documentation frameworks, and governance mechanisms that may not have previously existed in formalized form.
As Kuwait transitions into a rule-based and transparency-driven tax landscape, a proactive and structured approach to transfer pricing will be critical for managing risk and ensuring sustainable compliance.
