Kuwait

Kuwaiti tax law does not impose withholding tax (WHT). However, all public bodies and private entities are required to retain 5% from the contract, agreement, or transaction value or from each payment made to any incorporated body until presentation of a tax clearance certificate, by the recipient of such payment from the Ministry of Finance (MoF), confirming that the respective company has settled all of its tax liabilities in Kuwait. The final payment should not be less than 5% of the total contract value.

Tax treaties

Kuwait has entered into tax treaties with several countries for the avoidance of double taxation. Treaties with several other countries are at various stages of negotiation or ratification.

The interpretation of tax treaties by the Kuwait Tax Authority is not always consistent or in line with the interpretation generally considered appropriate by the taxpayers and usually does not follow the OECD’s guidance or the international standards for the interpretation of tax treaties. As a result, disputes on the interpretation of various clauses in tax treaties between taxpayers and the DIT are common. Disputes with the DIT regarding tax treaties normally arise with respect to the following topics:

• Existence of a PE.
• Income attributable to a PE.
• Tax deductibility of costs incurred outside Kuwait.

The domestic tax law in Kuwait does not provide for WHTs. The WHT rates listed in the table are for illustrative purposes only.

Notes

1. The rate is 0% for amounts paid to a company of which the government owns at least 20% of the equity.
2. The rate is 0% for interest paid to the government of the other contracting state. Under the Ethiopia treaty, the rate is also 0% for the interest paid to entities in which the government owns a specified percentage of the equity and for interest paid on loans guaranteed by the government.
3. The rate is 0% for dividends and interest paid to the government of the other contracting state. Under the Ethiopia treaty, the rate is also 0% for dividends paid to entities in which the government owns a specified percentage of the equity.
4. The rate is 10% for dividends paid to the government of Kuwait or any of the institutions or any intergovernmental entities. The rate is 15% for other dividends.
5. The 5% rate applies if the recipient of the dividends owns, directly or indirectly, at least 10% of the payer. The 15% rate applies to other dividends.
6. The rate is 0% for amounts paid to the government or governmental institution of the other contracting state. The 5% rate applies to other dividends.
7. The rate is 0% for amounts paid to the government of the other contracting state and to entities of which the government owns at least 51% of the paid-up capital.
8. For dividends and interest, the rate is 0% if the payments are made to the government or a governmental institution of the other contracting state, or to a company that is a resident of the other contracting state and is controlled by, or at least 49% of the capital is owned, directly or indirectly, by, the government or a governmental institution. A 0% rate also applies to interest arising on loans guaranteed by the government of the other contracting state or by a governmental institution or other governmental entity of the other contracting state.
9. A 0% rate applies if the beneficial owner of the dividends is a company that holds directly at least 10% of the capital of the company paying the dividends.
10. The rate is 0% if the payments are made to the government or a governmental institution of the other contracting state, or to a company that is resident of the other contracting state and is controlled by, or at least 25% of the capital is owned, directly or indirectly, by, the government or a governmental institution of the contracting state. The 5% rate applies to other dividends.
11. The rate is 0% if the beneficial owner of the interest is a resident in the other contracting state and the loan is secured or financed, directly or indirectly, by a financial entity or other local body wholly owned by the government of the other contracting state.
12. The 5% rate applies if the recipient of the dividends owns, directly or indirectly, at least 25% of the payer. The 10% rate applies to other dividends.
13. Except in the case of dividends paid by a non-resident-owned investment corporation that is a resident of Canada, the rate is 5% if the beneficial owner of the dividends is a company that owns 10% or more of the issued and outstanding voting or 25% or more of the value of all of the issued and outstanding shares. The 15% rate applies to other dividends.
14. Dividends or interest paid by a company that is resident of a contracting state is not taxable in that contracting state if the beneficial owner of the dividends or interest is the government or governmental institution of the other contracting state.
15. The rate is 0% if the dividend is paid to the other contracting state or any government or governmental institution therein. The 5% rate applies if the dividend is paid to a company that directly holds at least 10% of the capital of the company paying the dividends. The 10% rate applies to other dividends.
16. The rate is 5% if the dividend is paid to (i) a government or governmental institution of the other contracting state or (ii) a company that directly or indirectly controls at least 15% of the capital of the company paying the dividends and its participation in that company exceeds 200,000 US dollars (USD). The 10% rate applies to other dividends.
17. The 0% rate applies if (i) the dividend is paid to a company that holds at least 25% of the capital of the company paying the dividends or (ii) the beneficial owner of the dividend is the other contracting state or any governmental institution. The 5% rate applies if the dividend is paid to a pension fund or other similar institutions. The 15% rate applies to other dividends.
18. The 0% rate applies if the dividend is paid to a company that has invested more than USD 3 million in the capital of the company paying the dividends. The 5% rate applies to other dividends.
19. The 0% rate applies if the dividend or interest is paid to the government or any governmental institution of the other contracting state. The 5% rate applies to all other dividends and interest.
20. The 5% rate applies if the dividend is paid to a company that owns at least 10% of the voting shares of the company paying the dividends. The 10% rate applies to other dividends.
21. The 0% rate applies if the interest is paid (i) to the government or governmental institution of the other contracting state or (ii) to a resident of that other contracting state with respect to debt-claims guaranteed, insured, or indirectly financed by the government or governmental institution of that other contracting state. The 10% rate applies to other interest.
22. The 10% rate applies where the royalties arise from the use of, or the right to use, any patent, trademark, design or model, plan, secret formula or process, or any copyright of scientific work, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial, or scientific experience. The 15% rate applies where the royalties arise from the use of, or the right to use, cinematograph films, tapes for radio or television broadcasting, or any copyright of literary or artistic work.
23. The 2.5% rate applies if the dividend is paid to the government of the other contracting state. The 5% rate applies if the dividend is paid to a company that holds at least 10% of the capital of the company paying the dividends. The 10% rate applies to other dividends.
24. The 10% rate applies if the dividend is paid to a company that holds at least 10% of the capital of the company paying the dividends. The 15% rate applies to other dividends.
25. The 5% rate applies if the dividend is paid to (i) a company that directly holds at least 10% of the capital of the company paying the dividends or (ii) a resident of the other contracting state. The 10% rate applies to other dividends.
26. The 0% rate applies where the company receiving the dividends is a resident of the other contracting state that directly holds at least 10% of the capital of the company paying the dividends. The 5% rate applies to other dividends.
27. The 5% rate applies where the dividend is paid to a government or governmental institution of the contracting state. The 10% rate applies to other dividends and interest. The 0% rate applies to interest paid to a government or governmental institution or to loans given to such institutions.
28. The 5% rate applies where the dividend is paid to a company that directly holds at least 25% of the capital of the company paying the dividends. The 10% rate applies to other dividends.
29. The 5% rate applies where the dividend is paid to a company that directly holds at least 10% of the capital of the company paying the dividends. The 10% rate applies to other dividends.
30. The 10% rate applies where the dividend is paid to the government or any governmental institution in the other contracting state. The 15% rate applies to other dividends.
31. The 0% rate applies if the dividend is paid to the government, administrative-territorial, political subdivisions, or a local authority of the other contracting state, or the central banks of the states, or other governmental agencies or financial institutions, as may be specified and agreed to in an exchange of notes. The 5% rate applies if (i) the beneficial owner is a company that directly controls at least 20% of the capital of the company paying the dividends, or (ii) the beneficial owner is an individual.
32. The 0% rate applies where the dividend is paid to the government or any governmental institution of that contracting state. The 5% rate applies where the beneficial owner of the dividend is a company that directly or indirectly controls at least 10% of the capital of the company paying the dividends. The 10% rate applies to other dividends.
33. The 0% rate applies where dividends are paid by a company that is a resident of Belgium to (i) the government of Kuwait or any governmental institution established in Kuwait or (ii) a company that is a resident of Kuwait in whose capital the government of Kuwait directly or indirectly owns at least 25%.
34. The 0% rate applies to (i) interest paid to a government or any governmental institution of contracting state or (ii) interest arising from loan or credit made by a governmental institution for financing exports. The 10% rate applies to other interest.
35. The 0% rate applies where the dividend or interest is paid to the central bank, government, or any governmental institution. The 5% rate applies to other dividends and interest.
36. The 0% rate applies where interest is paid to the central bank, government, or any governmental institution. The 5% rate applies to other interest.
37. The 0% rate applies if the dividend is paid to (i) a company that directly holds at least 10% of the capital of the company paying the dividends or (ii) a government or any governmental institution. The 5% rate applies to other dividends.
38. The 0% rate applies where the interest is paid to a bank, government, or any governmental institution. The 5% rate applies to other interest.
39. The rate of 5% applies if the beneficial owner of the interest carries on business in the other contracting state through a PE and the debt on which the interest is paid is connected to such PE.
40. The 0% rate applies where the dividend is paid to the government or any governmental institution of that contracting state. The 5% rate applies to other dividends.
41. The 0% rate applies where interest is paid to the central bank or government of a contracting state. The 2% rate applies to other interest.
42. The 0% rate applies where interest is paid to the government or any governmental institution of a contracting state.
43. The 0% rate applies where the dividend or interest is paid to the government or any governmental institution of a contracting state. The 5% rate applies to other interest and dividends.
44. The 0% rate applies where interest is paid to the government or any governmental institution of a contracting state. The 10% rate applies to interest paid to financial institutions. The 15% rate applies to all other interest.
45. The 4.9% rate applies in case of interest paid to banks, and 10% in other cases.
46. The 0% rate applies where the interest is paid to the government or any governmental institution of a contracting state or the central bank of the state. The 10% rate applies in other cases.
47. The 5% rate applies if the beneficial owner is a company that owns at least 3% of the shares of the company paying the dividends. The 10% rate applies in all other cases.
48. The 0% rate applies if the dividends are paid to the government or any governmental institution of a contracting state. The 15% rate applies in all other cases.
49. The rate is 0% if the dividend is paid to any government, governmental institution, or central bank of a contract state. The 5% rate applies if the dividend is paid to a company that directly holds at least 10% of the capital of the company paying the dividends. The 15% rate applies to other dividends.
50. The 0% rate applies if interest is paid to the other contracting state, political subdivision, local authority, or their governments. The 10% rate applies in all other cases.