The second half of 2026 has made one thing clear: economic diversification across Qatar, Bahrain, Oman and Kuwait continues at pace. Oman has strengthened its position as a key regional logistics corridor, Bahrain is seeing significant investment in cloud infrastructure and data centres, Qatar is progressing major North Field expansion projects and Kuwait is actively relaunching government infrastructure tenders.
Kuwait has also recently amended its Public Tenders Law, with changes designed to improve the efficiency and flexibility of government procurement procedures. The amendments were published in September 2026 and are due to take effect three months after publication.
However, this rapid growth is being accompanied by an increasingly complex regulatory environment. Tax authorities across Qatar, Bahrain, Oman and Kuwait are placing greater emphasis on compliance, documentation and enforcement. For companies operating across these markets, protecting project margins increasingly depends on two factors: controlling capital expenditure (CAPEX) and carefully structuring cross-border tax arrangements.
Specialists across the BDO regional network have identified three critical areas that businesses should review before the end of the current quarter.
1. Qatar and Kuwait: the cross-border payment trap — withholding tax and tax retention
Foreign subcontractors and consortiums working on infrastructure projects in Qatar and Kuwait can face significant tax and cash flow consequences where composite supply agreements, international service fees, related-party charges, licence payments and other cross-border arrangements are not structured appropriately from a tax perspective.
- In Qatar: withholding tax (WHT) applies to certain payments made to non-residents. Qatar has also introduced a mechanism allowing eligible resident taxpayers approved by the General Tax Authority as Trusted Entities to apply qualifying double tax treaty (DTT) relief directly at source. Where the relevant requirements are satisfied, this may allow a reduced WHT rate or exemption to be applied before payment, reducing the need for a subsequent WHT refund process. Appropriate documentation and evidence supporting the recipient's eligibility for treaty benefits remain important.
- In Kuwait: the 5% tax retention requirement can have a significant impact on cash flow, particularly for foreign contractors and businesses operating under contracts in Kuwait. Release of retained amounts generally depends on obtaining the relevant tax clearance or retention release documentation from the Kuwait tax authorities, with the process and timing influenced by the tax position of the underlying contract.
- The BDO solution: conduct an end-to-end review of contracts involving non-residents to identify potential WHT and tax retention exposures, minimise cash flow disruption and support applications for WHT refunds or the necessary retention release documentation.
2. Bahrain and Oman: end-to-end VAT reconciliation for infrastructure projects
Capital-intensive projects — from data centre construction in Manama to port modernisation in Salalah and Duqm — can generate significant volumes of input VAT.
- With a standard VAT rate of 10% in Bahrain and 5% in Oman, VAT recoveries can have a material impact on project working capital. VAT refund and input tax recovery positions require appropriate supporting documentation and a clear link between expenditure and taxable business activities. Errors in the treatment of import VAT, subcontractor invoices or the underlying documentation can affect the recoverability of input VAT.
- The BDO solution: establish robust reconciliation processes and prepare a comprehensive supporting file before submitting significant VAT refund claims, helping the business respond efficiently to questions or information requests from the relevant tax authority.
3. CAPEX audit: why local oversight matters
Many major groups operating in Oman, Bahrain, Qatar or Kuwait are managed from regional hubs in the UAE. However, reviewing major projects solely through regional reporting may not provide sufficient visibility over local supply chains, procurement processes, port procedures, contractor performance or approval timelines with local authorities.
Without sufficient local insight, cost leakage, control weaknesses and emerging project risks may only become visible after they have already affected project margins.
Why choose BDO?
BDO's autonomous member firms and local professionals in Muscat, Doha, Manama and Kuwait City provide businesses with access to on-the-ground knowledge alongside regional capabilities. This enables capital expenditure and project risk reviews to consider both the financial data and the local commercial, regulatory and operational environment in which a project is being delivered.
The markets of Qatar, Bahrain, Oman and Kuwait continue to offer significant opportunities, but complex projects leave limited room for overlooking tax, cost and operational risks. Businesses supported by advisers with genuine local market knowledge are better positioned to identify these issues early and protect project value.
Connect with BDO Kuwait for a review of your tax and operational risks ahead of the financial year-end.