Al-Qabas, 12 August 2024: Kuwait is undertaking a comprehensive reform of its tax system to align with global standards and reduce its reliance on oil revenues.

As part of this initiative, the country has signed its first-ever double tax treaty with another Gulf state, the UAE.

According to a Partner in Tax and Regulatory Services at BDO Accounting and Consulting in Kuwait, the Kuwaiti government is implementing several measures to address its budget deficit, including increasing tax revenues.

The partner has stated that the tax treaty with the UAE comes at an opportune time to prevent or mitigate double taxation between the two countries.

Such agreements provide tax clarity and predictability, which can encourage an environment conducive to boosting investments.

While Kuwait currently imposes a 15% tax on business income, this tax has primarily been applied to non-Gulf foreign companies and non-Gulf foreign shareholders.

However, he has further indicated that the corporate profits tax will now be extended to all companies operating in the country.

The move is a significant shift for Kuwait towards establishing a more equitable tax system, where companies will contribute a larger share to government revenues.

The reforms are part of Kuwait’s broader efforts to diversify its economy and reduce its dependence on oil exports, which have traditionally been the primary source of government revenue.

By aligning its tax policies with global standards and encouraging a more favourable investment climate, Kuwait aims to attract foreign investment and promote sustainable economic growth.

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