Kuwait Tax Alert - Pillar Two Regulations issued
Kuwait Tax Alert - Pillar Two Regulations issued
On 29 June 2025, Kuwait’s Ministry of Finance (MOF) issued the much-anticipated Executive Regulations for Law No. 157 of 2024 (the Regulation), which governs the taxation of multinational enterprise (MNEs) groups operating in the country. The Regulations aim to interpret and clarify the provisions of the law, define procedures and implementation mechanisms, and provide a clear understanding for all relevant parties.
As background, Law No. 157 of 2024 applies to MNEs operating in Kuwait with annual consolidated revenues of EUR 750 million or more in at least two of the four preceding fiscal years (revenue threshold) based on the consolidated financial statements of the ultimate parent entity (UPE). The law, which aims to ensure that MNEs pay tax at an effective tax rate of 15% on their Kuwait profits, introduced a domestic minimum top-up tax (DMTT) that is aligned with the Pillar Two Model Rules. To provide certainty to taxpayers and enhance consistency with the Model Rules, Article 116 of the Regulations require the Regulations to be applied and interpreted in line with the Model Rules and consolidated commentary.
The Regulations address topics such as taxable and excluded entities, permanent establishments, elections, computation of the top-up tax, safe harbours, restructuring, registration and other compliance requirements, administrative penalties and disputes resolution mechanisms. Notably, the Regulations do not include tax retentions obligations on taxable entities. This publication summarizes the key features of the Regulations.
Next Step
The details included in the Regulations provide sufficient clarity on how the Kuwait DMTT operates. The immediate next steps for potentially affected businesses operating in Kuwait include the following:
To learn more about the Regulation, please download our Tax Alert.
Please feel free to contact our Tax Partner Rami Alhadhrami if you have any questions or require any assistance.
Download Report
As background, Law No. 157 of 2024 applies to MNEs operating in Kuwait with annual consolidated revenues of EUR 750 million or more in at least two of the four preceding fiscal years (revenue threshold) based on the consolidated financial statements of the ultimate parent entity (UPE). The law, which aims to ensure that MNEs pay tax at an effective tax rate of 15% on their Kuwait profits, introduced a domestic minimum top-up tax (DMTT) that is aligned with the Pillar Two Model Rules. To provide certainty to taxpayers and enhance consistency with the Model Rules, Article 116 of the Regulations require the Regulations to be applied and interpreted in line with the Model Rules and consolidated commentary.
The Regulations address topics such as taxable and excluded entities, permanent establishments, elections, computation of the top-up tax, safe harbours, restructuring, registration and other compliance requirements, administrative penalties and disputes resolution mechanisms. Notably, the Regulations do not include tax retentions obligations on taxable entities. This publication summarizes the key features of the Regulations.
Next Step
The details included in the Regulations provide sufficient clarity on how the Kuwait DMTT operates. The immediate next steps for potentially affected businesses operating in Kuwait include the following:
- Assess whether the entity falls within the scope of the DMTT. Foreign MNEs should ascertain whether their business in Kuwait creates a PE.
- Assess the tax impact and whether it is possible to benefit from any reliefs provided in the Regulations.
- In case of multiple taxable entities in Kuwait, discuss and appoint one CE to handle the tax compliance for the group.
- Prepare for tax registration, tax provisioning and subsequent tax compliance. For the 2025 year, the registration is due 30 September 2025.
- Prepare (or review existing) transfer pricing policies and analyze related party transactions
To learn more about the Regulation, please download our Tax Alert.
Please feel free to contact our Tax Partner Rami Alhadhrami if you have any questions or require any assistance.
Download Report