Value-added tax (VAT)
The GCC states (including Kuwait) executed the GCC VAT framework agreement in February 2017. The signing of the treaty paves the way for the introduction of VAT with effect from 1 January 2018 in the GCC. However, the GCC countries could implement VAT in either 2018 or 2019 as per the terms of the treaty. In Kuwait, the GCC framework agreement is currently under discussion in the Parliament while the draft Law is under preparation by the government.
The GCC states have approved a unified customs tariff of 5% on cost, insurance, and freight (CIF) invoice price, subject to certain exceptions. A higher tariff is imposed on imports of tobacco and its derivatives, among other products.
There are no excise taxes in Kuwait.
There are no property taxes in Kuwait.
There are no transfer taxes (e.g. stamp duty, real estate) in Kuwait.
There are no payroll taxes applicable in Kuwait, other than those for social security contributions (see below).
Social security contributions
For Kuwaiti employees, contributions are payable monthly by both the employer and employee under the Social Security Law. The employer’s contribution is 11.5% and the employee’s is 8% of monthly salary, up to a ceiling of 2,750 Kuwaiti dinars (KWD) per month. Benefits provided include pensions on retirement and allowances for disability, sickness, and death.
In addition to the above contributions, the employee must contribute 2.5% of their monthly salary, up to a ceiling of KWD 1,500 per month, under the Social Security Law.
There are no social security obligations for expatriate workers. However, for foreign employees, it is generally necessary to make terminal indemnity payments calculated at 15 days’ pay-per-year for the first three years of service and 2/3 month’s pay-per-year thereafter.
National Labour Support Tax (NLST)
The purpose of the NLST law is to encourage the national labour force to work in the private sector by closing the gap in salaries and benefits between public and private sectors.
As per the law, Kuwaiti companies listed in the Kuwait Stock Exchange (KSE) are required to pay an employment tax of 2.5% of the company’s net annual profits.