Kuwait corporate tax - guide for international expansion

Are you planning to do business in Kuwait? Then it's essential to understand how corporate income tax works and what it means for your company operating in this Gulf state.

Kuwait has a unique corporate tax structure that primarily targets foreign entities, whilst Kuwaiti and GCC-owned companies enjoy significant tax exemptions. However, recent changes including the introduction of a domestic minimum top-up tax have added new compliance requirements for large multinational enterprises. Whether you're expanding your business or establishing operations in Kuwait, understanding your tax obligations is crucial for successful market entry.

If you're looking for efficient ways to manage international payments and handle corporate tax obligations in Kuwait, Wise Business can help streamline your cross-border transactions and ensure you can pay taxes in Kuwaiti Dinars without excessive fees.

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This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Kuwait Corporate Tax Rate in 2025

Kuwait operates a dual corporate tax system with a standard rate of 15% for foreign entities conducting business in the country. This rate applies specifically to foreign 'corporate bodies' that carry out business or trade in Kuwait, either directly or through an agent.¹

Kuwaiti companies and those wholly owned by Gulf Cooperation Council (GCC) nationals (including Bahrain, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) are completely exempt from corporate income tax. However, GCC companies with foreign ownership become subject to taxation proportionate to their foreign ownership percentage.¹

As of 1 January 2025, Kuwait has introduced a domestic minimum top-up tax under the OECD's Pillar Two framework. This applies a 15% minimum effective tax rate on multinational enterprises with global consolidated revenues of at least EUR 750 million. The domestic minimum top-up tax operates alongside the existing corporate tax regime but replaces other taxes for qualifying multinational enterprises.¹

For companies operating in Kuwait's offshore area of the partitioned neutral zone under Saudi Arabian control, only 50% of their taxable profit is subject to Kuwait's corporate tax.¹

How to Pay Corporate Tax in Kuwait

Corporate taxes in Kuwait are paid in Kuwaiti Dinars (KWD). Foreign companies subject to the 15% corporate income tax under Kuwait Decree No. 3/1955 must register with the Kuwait Tax Authority and comply with local filing requirements.² For multinational enterprises subject to the new domestic minimum top-up tax, registration with the Kuwait Tax Authority is required within 120 days of becoming subject to the law.³

For Foreign Entities subject to the Corporate Income Tax (CIT) Law, the tax return must be filed within three months and 15 days from the end of the taxable period. A filing extension of up to 60 days is generally available, with the full tax payment due when the return is submitted.⁴

For large Multinational Enterprises (MNEs) (revenue over €750M) subject to the new Domestic Minimum Top-Up Tax (DMTT) Law, the tax return, along with audited financial statements, is due within 15 months from the end of the financial year.⁵ These entities must also retain all accounting records for 10 years.⁴

Penalties for non-compliance include fines ranging from 5% to 25% of the final tax value for delayed filing, and 1% of unpaid amounts for every 30 days of delayed payment. Administrative violations, including failure to register within prescribed timelines, carry fines of KWD 3,000.⁵

Let's calculate the annual tax due for a company with a turnover of KWD 460,000 (approximately £1.5 million) operating with a 10% profit margin, giving it a taxable profit of KWD 46,000.

At Kuwait's corporate tax rate of 15%, the tax owed would be:

KWD 46,000 × 15% = KWD 6,900

When expanding your business to Kuwait, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to manage international finances. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

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Tax Compliance in Kuwait ^{6 7}

To comply with the Kuwait corporate tax policy, foreign companies must carefully follow filing deadlines, payment schedules, and reporting requirements. The points to keep in mind are:

• Corporate Income Tax: Foreign corporate bodies operating in Kuwait (whether directly, through an agent, or as minority shareholders) are subject to tax on their profits and any income earned in Kuwait, such as royalties or technical services.
• Zakat: Certain companies, including KSC and KSC(c) entities, must pay Zakat at 1% of net profit, with filings also due within 105 days of year-end.
• Exemptions for GCC Companies: Entities wholly owned by GCC nationals are exempt from corporate income tax, though mixed ownership structures are taxed on the foreign share.
• Record Keeping: Businesses must retain records for 10 years to support their filings, as tax audits and inspections are regularly conducted.

International Expansion to Kuwait

Kuwait, positioned at the northern tip of the Arabian Gulf, is one of the Middle East’s most prosperous and strategically located economies. It has a population of around 4.5 million and a GDP that exceeds USD 170 billion.

The country has one of the world’s highest GDP per capita levels. Abundant oil reserves, representing about 8% of the world’s proven supply, make Kuwait a solid player in global energy markets. At the same time, the government is driving diversification under its long-term strategy, “Kuwait Vision 2035 – New Kuwait,” which seeks to transform the nation into a regional hub for trade, logistics, finance, and renewable energy.⁸

For international businesses, Kuwait’s appeal lies in both its resources and its forward-looking reforms. Political stability, a strong legal framework, and one of the most transparent regulatory environments in the region ensure a secure climate for investors. Foreign Direct Investment (FDI) is rising rapidly, according to UNCTAD’s 2024 World Investment Report. Also, inflows nearly tripled in 2023, reaching USD 2.11 billion.⁹ The government’s FDI law allows up to 100% foreign ownership in targeted sectors such as infrastructure, energy, and communications, further enhancing the country’s competitiveness.¹⁰

Kuwait’s business environment also benefits from a tax-friendly structure. Individuals enjoy a tax-free regime with no personal income tax. Companies should consider the Kuwait corporate tax rate when comparing opportunities across jurisdictions. In a global context where tax rates in 2025 average significantly higher, Kuwait’s system positions it as an attractive destination for multinationals.

The steps for setting up a business in Kuwait are as follows:¹¹

1. Define your business idea and prepare a solid business plan.
2. Register with the Ministry of Commerce to obtain a commercial license.
3. Secure additional licenses from relevant ministries for regulated activities.
4. Open a local bank account to manage operations and capital flows.

In short, Kuwait combines a strong economy with investor-friendly reforms, making it a reliable base for global expansion. Diversepayment options like cards, bank transfers, and mobile wallets further support smooth business operations.

Incorporation of Business in Kuwait

To establish a company in Kuwait, investors must go through the Ministry of Commerce and Industry (MOCI) and, in many cases, the Kuwait Direct Investment Promotion Authority (KDIPA). The incorporation process typically involves the following steps:¹²

• Apply MOCI or KDIPA depending on the entity type.
• Prepare and complete the Memorandum of Association (MOA) per the chosen company structure.
• Authenticate the MOA at the Ministry of Justice.
• Register the company with MOCI and obtain the Certificate of Commercial Registry.
• Secure approvals from other ministries or authorities if the business activity requires it (e.g., Ministry of Health, Ministry of Communications).
• Apply for and obtain the Commercial License.
• Complete the Investment License application through KDIPA to begin operations.

Required documentation may include:¹³

• KDIPA’s decision and the entity’s official documents.
• MOCI application forms and “Ease of Procedures” letter.
• Civil ID or passport copies of partners or representatives.
• Public Authority for Civil Information (PACI) number.
• Power of Attorney if one partner is signing on behalf of others.
• Manager’s criminal record and university degree.
• Municipality approval, rent contract, and payment receipt.

Additional approvals from designated authorities will be required, depending on the sector.

Types of Businesses in Kuwait

The Commercial Companies Law (CCL) provides for several types of entities:⁶

• Limited Liability Company (WLL): Most common for foreign investors. Foreign ownership is capped at 49% unless KDIPA approval is obtained. Cannot engage in banking or insurance. Must issue annual audited accounts.
• Shareholding Company (KSC): Includes public and closed types. Public KSCs require an Amiri Decree, may be listed on the Kuwait Stock Exchange, and must have at least five shareholders. Closed KSCs (KSC(C)) are privately held and do not require an Amiri Decree.
• Partnerships: Can be general (all partners have unlimited liability) or limited (mix of general and limited partners).
• Joint Ventures: Contractual associations without legal personality, typically used for construction projects. Must operate under the Kuwaiti partner’s trade license.
• Branches: Foreign companies may only set up branches with KDIPA approval, except GCC-owned companies, which are free to establish branches. Others must operate through a local commercial or service agent.

Investors can successfully set up a business in Kuwait by following the required steps. Choosing the right entity type ensures the company fits within the country’s rules and investment framework.

International Corporate Tax Best Practices

Here are some of the best strategies to ensure compliance with local tax laws, save money, and reduce tax burdens when operating internationally.

Stay compliant with local and international tax laws by completing the legal registration process in every country where your business operates. File all required tax returns on time to avoid penalties, and ensure you stay up to date with local tax laws to remain fully compliant.

Companies should understand and adhere to global standards set by organisations like the OECD. With frameworks like Base Erosion and Profit Shifting (BEPS) and the new Pillar Two Global Minimum Tax, companies can ensure transparency, prevent tax avoidance, and avoid legal risks.

Leverage double taxation treaties (DTTs) to ensure you're not taxed on the same income twice. Kuwait has Double Taxation Agreements with numerous countries, and any foreign tax paid may be available as a credit against Kuwait corporate tax liability, subject to treaty conditions.

Maintain up-to-date and transparent financial records to help prepare accurate tax returns, reducing the risk of errors that could lead to penalties. Organised financial records also simplify the process during tax audits and compliance reviews.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to Kuwait efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

• Get paid like a local: Use local account details for 8+ major currencies to easily receive payments from customers or investors.

• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.

• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QuickPay QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

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FAQs - Corporate Tax in Kuwait

Who is liable for corporate tax in Kuwait?

Corporate tax in Kuwait applies to foreign entities conducting business in the country at a rate of 15%. Kuwaiti companies and those wholly owned by GCC nationals are exempt from corporate income tax. Additionally, multinational enterprises with global revenues exceeding EUR 750 million are subject to the domestic minimum top-up tax of 15% effective from 1 January 2025.

Are there any tax incentives for businesses in Kuwait?

Kuwait offers complete corporate tax exemption for companies wholly owned by Kuwaiti or other GCC nationals. There are also provisions for transitional safe harbour relief for up to two years for qualifying multinational enterprises under the new domestic minimum top-up tax regime, subject to meeting specific conditions.

What is the tax treatment of dividends in Kuwait?

Kuwait does not impose corporate income tax on locally owned companies, so dividend distributions from such companies are generally not subject to corporate tax. However, withholding taxes may apply to payments to non-residents, and the specific treatment can vary depending on applicable double taxation agreements.

What is the process for registering for corporate tax in Kuwait?

Foreign companies must register with the Kuwait Tax Authority to comply with the 15% corporate income tax. For multinational enterprises subject to the domestic minimum top-up tax, registration must be completed within 120 days of becoming subject to the law. The registration process involves submitting required documentation and establishing compliance procedures with the Kuwait Tax Authority.

What are the common pitfalls to avoid regarding corporate tax in Kuwait?

Common pitfalls include failing to register within the prescribed timelines (which carries a KWD 3,000 fine), not maintaining proper accounting records for the required 10-year period, and misunderstanding the scope of tax exemptions for GCC ownership. Companies should also ensure they understand whether they fall under the traditional corporate tax regime or the new domestic minimum top-up tax rules, as different compliance requirements apply to each.

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Sources used in this article:

1. PwC Tax Summaries: Kuwait Taxes on Corporate Income
2. Ministry of Finance (MOF) Kuwait: Tax Claims Registration System (TCRS) Public Access
3. KPMG: Electronic Registration Service for Companies Subject to Domestic Minimum Top-Up Tax Launched
4. PwC Tax Summaries: Kuwait Tax Administration
5. EY: Kuwait Implements Domestic Top-Up Tax on MNEs
6. PwC: Doing Business in Kuwait Guide (PDF)
7. Wafeq Business Hub: Types of Taxes in Kuwait
8. Trade Council: Investing in Kuwait (PDF)
9. Mauritius Trade: Market Intelligence - Investing in Kuwait
10. Exportiamo: Doing Business in Kuwait - Advantages and Disadvantages
11. Lloyds Bank Trade: Kuwait Incorporation Information
12. Kuwait Direct Investment Promotion Authority (KDIPA): Investment Licensing Procedures
13. KDIPA: Establishment Process Guide (PDF)

Sources last checked 27/10/2025