Kuwait’s multinationals tax to raise $825m a year, says minister

• 15% levy came into force on January 1
• Part of strategy to diversify economy
• Further fiscal reforms planned

Kuwait expects its tax on multinational businesses to generate nearly $825 million a year, the country’s finance minister has said.

Noora Al Fassam told state television on Tuesday that the 15 percent tax would affect nearly 300 companies – 45 from Kuwait and the other GCC states and about 250 from other countries.

Fassam described the levy as the “first step” towards more comprehensive reforms recommended by the International Monetary Fund.

The tax “is intended to diversify the country’s sources of income”, she said. “The reforms we intend to implement include sustainable non-oil earnings with the aim of achieving fiscal balance.”

She added: "It is part of a government strategy to build a more diversified economy, attract foreign investment and create jobs for citizens.”

The legislation also aims to “ensure a fair taxation system in Kuwait and to prevent tax dodging”.

Fassam said the tax would “encourage the private sector" and show "we are serious in going ahead with the fiscal and economic reforms”.

The measure is based on the OECD's two-pillar solution for fair taxation, which stipulates that large multinational enterprises pay a minimum effective tax rate of 15 percent on profits in each country where they operate.

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A Kuwaiti think tank predicts that the tax will help attract foreign direct investment. It is not “mere new income for Kuwait’s coffers”, the Al Shal Centre wrote in a report published this week.

It added: “The tax proposal will help Kuwait fund fiscal deficits and reduce reliance on volatile oil export earnings or withdrawal from overseas assets.”

The think tank estimated Kuwait’s oil revenues at about KD18 billion ($60 billion) in the first nine months of the fiscal year 2024-25, which started on April 1.

Total revenues during that period are estimated at nearly KD21 billion, but budgeted spending stands at KD24.5 billion.