Arab News, 6 November 2023: The Kuwaiti government has announced it is going to launch a corporate tax initiative.

The plan is being introduced as the country looks to join the Organisation for Economic Co-operation and Development/G20’s Inclusive Framework on base erosion and profit shifting or BEPS.

BEPs refer to tax planning strategies used by multinational entities that exploit gaps and mismatches in tax rules to avoid paying tax.

They are the only GCC country yet to become a member of the Inclusive Framework.

They are going to introduce a Business Profits Tax Law as part of a complete overhaul of the existing tax framework in the country.

The Business Profits Tax Law will introduce a 15% tax on the profits of various operating entities including corporate entities, partnerships, and businesses with separate legal characteristics who have all been established and incorporated in Kuwait or operate in the country.

The plan will be completed by 1 January 2025 and will mean Kuwaiti multinational companies including government entities operating in overseas markets, with annual revenues exceeding 806 million Dollars will be taxed at 15%.

Individuals, micro and small enterprises will be exempt.

The Tax Law will be introduced as an amendment to the country’s existing tax laws in line with the Pillar Two framework being implemented globally.

Only foreign companies carrying out business or trade in Kuwait are taxed on their profits and capital gains income at the moment.

The country’s existing corporate income tax law imposes a tax on the income of any body corporate, wherever it is incorporated, which earns income from a Kuwait source.

For more news and content, try Lexis Middle East. Click on lexis.ae/demo to begin your free trial of Lexis® Middle East platform.

You can also explore the legal landscape by subscribing to our Weekly Newsletter.

Want to learn more about Lexis® Middle East? Visit, https://www.lexis.ae/lexis-middle-east-law/.