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      On 22 June 2026, the State of Kuwait has signed the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbC MCAA), representing another significant milestone in Kuwait's continued alignment with the OECD Base Erosion and Profit Shifting (BEPS) transparency standards.

      With this development, Kuwait joins a global framework of more than 115 jurisdictions that participate in the automatic exchange of Country-by-Country (CbC) Reports, providing tax authorities with a high-level overview of MNE groups global allocation of income, taxes paid and business activities.

      This reflects Kuwait’s ongoing commitment to enhancing tax transparency and strengthening Kuwait tax authorities Transfer Pricing (TP) and BEPS related risk assessment capabilities under OECD BEPS Action Plan 13 framework.

      While signing CbC MCAA does not in itself introduce domestic reporting or filing obligations, it provides a clear direction on the expected CbC compliance framework for multinational enterprise (MNE) groups with consolidated revenues exceeding EUR 750 million (or equivalent in local currency), once the necessary domestic legislation and exchange relationships are in place.

      Why does the CbC MCAA matter?

      The CbC MCAA provides the multilateral framework to enable the automatic exchange of CbC Reports between competent authorities, subject to the activation of bilateral exchange relationships and the implementation of domestic CbC reporting legislation. Once Kuwait implements its domestic CbC reporting framework and activates exchange relationships with other jurisdictions:

      • Kuwait-headquartered MNE groups would be required to file their CbC Reports in Kuwait through Ultimate Patent Entity, rather than relying on surrogate filing arrangements, and comply with any applicable notification obligations.
      • Foreign-headquartered MNE groups may not be required to locally file a CbC Report in Kuwait; however, they may be expected to file an annual CbC notification, and their CbC Reports would be available through the automatic exchange of information.

      The information contained in CbC Reports is intended to support high-level transfer pricing risk assessment, the assessment of other BEPS-related risks and identification of cases that may warrant further enquiry or audit. It is not intended to replace a detailed transfer pricing analysis or serve as the sole basis for transfer pricing adjustments.

      KPMG Observations

      Kuwait -headquartered MNE Groups (Ultimate Parent Entities)
      Key Implications

      CbC Reporting obligations: MNE groups meeting the local revenue threshold are expected to become subject to CbC reporting and notification requirements 

      Automatic exchange of CbC Reports: CbC Reports filed in Kuwait will be exchanged with other jurisdictions, highlighting the need for accurate and consistent reporting.

      Increased global transparency: CbC Reports filed in Kuwait will become available to tax authorities across participating jurisdictions, may be subject to multi-jurisdictional TP risk assessment purposes.

      Review of existing filing arrangements: Groups currently relying on surrogate parent entity filings would need to reassess and prepare for transition to direct filing in Kuwait.

      Interaction with DMTT / Pillar Two: MNE Groups within the scope of the Domestic Minimum Top-up Tax (DMTT) or OECD Pillar Two would be required to ensure that the CbC Report qualifies as a "Qualified CbC Report" for Transitional CbCR Safe Harbour purposes.

      Foreign-headquartered MNE Groups (Kuwait Subsidiaries and Branches)
      Key Implications

      Enhanced tax transparency: Kuwait tax authorities will be able to gain visibility over the group's global allocation of revenues, profits, taxes and economic activities, once exchange relationships become operational.

      Increased scrutiny and audit exposure: CbC data will strengthen tax authority to undertake tax and transfer-pricing risk assessments, identify potential profit shifting arrangements and select taxpayers for audit. MNEs should ensure consistency between CbC Report, transfer pricing documentation and financial information reported in the tax returns.

      Annual CbC notification obligation: Kuwaiti constituent entities may become subject to annual CbC notification requirements under Kuwait's implementing legislation.

      Potential local filing obligation: Subject to Kuwait's implementing legislation, local filing may apply in limited circumstances, such as where no effective exchange relationship exists or where a systemic failure of exchange occurs and surrogate filing is not available.

      Kuwait -headquartered MNE Groups (Ultimate Parent Entities)

      Key Implications

      CbC Reporting obligations: MNE groups meeting the local revenue threshold are expected to become subject to CbC reporting and notification requirements 

      Automatic exchange of CbC Reports: CbC Reports filed in Kuwait will be exchanged with other jurisdictions, highlighting the need for accurate and consistent reporting.

      Increased global transparency: CbC Reports filed in Kuwait will become available to tax authorities across participating jurisdictions, may be subject to multi-jurisdictional TP risk assessment purposes.

      Review of existing filing arrangements: Groups currently relying on surrogate parent entity filings would need to reassess and prepare for transition to direct filing in Kuwait.

      Interaction with DMTT / Pillar Two: MNE Groups within the scope of the Domestic Minimum Top-up Tax (DMTT) or OECD Pillar Two would be required to ensure that the CbC Report qualifies as a "Qualified CbC Report" for Transitional CbCR Safe Harbour purposes.

      Foreign-headquartered MNE Groups (Kuwait Subsidiaries and Branches)

      Key Implications

      Enhanced tax transparency: Kuwait tax authorities will be able to gain visibility over the group's global allocation of revenues, profits, taxes and economic activities, once exchange relationships become operational.

      Increased scrutiny and audit exposure: CbC data will strengthen tax authority to undertake tax and transfer-pricing risk assessments, identify potential profit shifting arrangements and select taxpayers for audit. MNEs should ensure consistency between CbC Report, transfer pricing documentation and financial information reported in the tax returns.

      Annual CbC notification obligation: Kuwaiti constituent entities may become subject to annual CbC notification requirements under Kuwait's implementing legislation.

      Potential local filing obligation: Subject to Kuwait's implementing legislation, local filing may apply in limited circumstances, such as where no effective exchange relationship exists or where a systemic failure of exchange occurs and surrogate filing is not available.

      Kuwait Tax Alert: July 2026

      Implications for Multinational Exterprises

      Read more

      What Should Taxpayers Do Now?

      While the detailed compliance framework will be established through forthcoming executive regulations, MNE groups with Kuwait operations or Kuwait-based parent entities should consider taking the following proactive steps:

      • Assess whether the group exceeds the EUR 750 million (or Kuwait Dinar equivalent) consolidated revenue threshold to determine potenreportingtial obligations under expected domestic legislation
      • Review existing CbC reporting arrangements, including the reporting entity, jurisdiction of filing and exchange relationships relevant to Kuwait
      • Evaluate whether existing surrogate parent filing arrangements remain appropriate for Kuwait-headquartered groups following implementation of the domestic CbC framework
      • Ensure consistency across CbC Reports, transfer pricing documentation (Master File / Local File), statutory financial statements and corporate income tax filings, and implement controls to identify and address data inconsistencies that may increase audit risk
      • Review transfer pricing policies and documentation to ensure alignment with the group's operating model, value creation and economic substance reflected in the CbC Report
      • Perform a structured OECD BEPS CbC risk assessment using risk indicators to identify areas that may attract tax scrutiny
      • Review historical CbC Reports to identify recurring risk indicators, anomalous profit allocations or inconsistencies that may attract increased scrutiny once Kuwait begins receiving exchanged CbC Reports
      • Assess eligibility for the OECD Transitional CbCR Safe Harbour where MNE groups are subject to DMTT or Pillar Two requirements
      • Assess governance, internal controls, data ownership and reporting processes to ensure the accuracy, completeness and consistency of CbC reporting and improve readiness for future transfer pricing audits and enquiries by tax authorities
      • Monitor forthcoming Kuwait Ministry of Finance (MoF) guidance on reporting obligations, notification procedures, reporting periods, exchange activation timelines and penalties provisions

      KPMG Observations

      While many foreign-headquartered MNE groups and Kuwait-headquartered Groups already satisfy their CbC reporting obligations through their Ultimate Parent Entity or Surrogate Parent Entity, Kuwait's forthcoming implementing legislation is expected to introduce additional domestic notification and compliance requirements. Accordingly, MNE groups should reassess their reporting arrangements, including notification obligations, exchange relationships, potential local filing requirements and overall compliance readiness. 

      It is important to note that entities subject to CbC reporting may not necessarily fall within the scope of the Kuwait Domestic Minimum Top-up Tax regime. 

      Conversely, MNE groups that have not previously been subject to Kuwait DMTT and/or CbC reporting requirements, but whose consolidated revenues are approaching the EUR 750 million threshold, should closely monitor their position and assess the potential implications of these reporting and tax obligations on the group.

      The CbC MCAA should also be viewed within the broader context of Kuwait's continued alignment with international tax standards. The introduction of Transfer Pricing Framework and DMTT under OECD Pillar Two initiative reflects Kuwait’s ongoing commitment to enhancing tax transparency, strengthening international tax cooperation, and aligning its tax framework with internationally accepted standards.

      Although the CbC Report is intended as a high-level transfer pricing risk assessment tool rather than evidence of arm's length pricing, international experience demonstrates that tax authorities increasingly use CbC information to identify perceived transfer pricing risks, select taxpayers for audit and initiate information requests. Consequently, consistency between the CbC Report, transfer pricing documentation and financial statements will become increasingly important.

      Given Kuwait’s progressive implementation of OECD BEPS measures in recent years, taxpayers should begin assessing the potential impact at this stage rather than waiting for the issuance of detailed regulatory guidance.

      How KPMG in Kuwait Can Help

      • Assess CbC reporting obligations including applicability, thresholds, notifications, and fling requirements for in-scope groups
      • Conduct CbCR Risk assessment using data analytical tools to identify potential gaps and analyse key risk areas for the Groups
      • Assist to efficiently collate data leveraging on technology to ensure accurate CbC reporting and flag inconsistencies across jurisdictions
      • Review CbC filing to ensure consistency transfer pricing documentation and financial information to enhance audit readiness.
      • Evaluate existing CbC report qualifies for Safe Harbour purposes for groups subject to DMTT / Pillar Two 
      • Advise on reporting obligations and implications of Public CbC Reporting for groups with operations in the European Union or Australia

      Previous Tax Alerts

      Decree-Law No. 62 of 2026 marks a significant step in aligning Kuwait’s tax treaty framework with OECD/G20 BEPS standards.
      Read more

      MoF Circular No. 1 of 2026 introduces an optional advance tax payment for taxpayers under Kuwait’s DMTT
      Read more

      Updates to 5% Tax Retention Rules for MNE groups subject to DMTT Law and for other taxpayers
      Read more

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