KUWAIT CITY, Dec 7: The Ministry of Finance finds itself racing against time as discussions heated over the proposed introduction of a Corporate Income Tax, a development first highlighted by Al-Seyassah on October 27 under the headline ‘The Ministry of Finance is racing against time ... Corporate Income Tax in 2025’, reports the daily. According to a draft of the Business Profits Tax Law, the government is leaning toward imposing a 15 percent income tax on the business activities of companies operating within Kuwait and Kuwaiti companies operating across multiple markets. However, a significant exemption is proposed – companies whose annual business turnover does not exceed one and a half million dinars during the tax period would be exempt.

The draft indicates that the tax would apply to profits starting after January 1, 2025, specifically targeting multinational groups. Furthermore, advance tax payments would be delayed until the beginning of 2026. Broader categories of taxable businesses would fall under the law beginning on January 1, 2027. As noted in Al-Seyassah’s observations, the tax law proposes a flat 15 percent rate on taxable income. Yet, there are exceptions – income derived by legal entities wholly owned by the state would be tax-free. Business income originating from the divided or submerged divided zone would attract a tax rate of 30 percent. However, this would be reduced to 50 percent if the taxpayer has already paid 50 percent of the tax owed to Saudi Arabia.

Further appeals can be made to the competent courts. A special Tax Grievances Committee will oversee these disputes, composed of members appointed by the Minister. The committee would consist of members from the Tax Administration, tax experts and other representatives such as advisors from the Fatwa and Legislation Department. If tax debts are deemed at risk of being lost, the Tax Administration may seek a court order to seize assets to recover owed sums, although taxpayers can lift these actions by providing sufficient guarantees. Late payment would result in a 1 percent fine for every 30 days that the tax or remittance remains unpaid. This fine would apply in several cases, such as the failure to submit timely tax declarations, failure to remit taxes withheld at the source, or delays in advance payments. The draft proposes comprehensive tax reforms that would reshape the fiscal landscape of Kuwait, impacting multinational corporations, small enterprises and local businesses alike. These new mechanisms aim to ensure a fair and transparent system for all taxpayers while aligning Kuwait with international tax standards.