KPMG Kuwait’s annual tax event to focus on Kuwait joining the Inclusive Framework related to BEPS

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Kuwait City, Jan 14: In view of Kuwait’s commitment to address the tax challenges emerging from digitalization of the economy, KPMG in Kuwait will be conducting its annual tax event Talking Tax on 23 January 2024.

On 15 November 2023, Kuwait joined the OECD/G20 Inclusive Framework on BEPS (Inclusive Framework), joining 140+ countries that are already signatories, to strengthen the efforts against tax avoidance .
Commenting on the significant step, Zubair Patel, Head of Tax, KPMG in Kuwait, said, “This measure is a positive shift toward attaining tax transparency both locally and globally. Kuwait’s participation in the implementation of the BEPS package of 15 measures will make for increased coherence of international tax laws.”

In its announcement regarding Kuwait joining the Inclusive Framework, the Organisation for Economic Co-operation and Development (OECD) mentioned that Kuwait had agreed to take part in the Two-Pillar Solution to bring about reforms in the tax laws and ensure that multinational enterprises paid their fair share of taxes in the regions they operated.

This change would mean that any Kuwaiti multinational company, including government entities, that are operating outside Kuwait and have an annual revenue greater than 750m euros (~KD 245m) will be subject to 15% tax on their profits in Kuwait. The implementation is expected to be in place 2025 onwards.

As a second phase for 2026, it is anticipated that the Kuwait Government will introduce new legislation in the form of Business Profits Tax Law (BPT Law) whereby all Kuwaiti companies/businesses will be subject to local corporate tax. Kuwait’s current corporate income tax rate stands at 15% and applies only to non-Kuwaiti companies that are earning income of Kuwait source. More details about the potential impact on Kuwaiti companies can be found in the tax alert KPMG in Kuwait published in November 2023 .
Speaking about the Kuwait’s evolving tax ecosystem, Fahim Bashir, Partner — Tax & Corporate Services, KPMG in Kuwait, emphasized on the need for businesses to stay on top of the changes that the Kuwait Government may make in terms of the BEPS minimum standards along with the implementation of the BPT Law in Kuwait.

He said, “These changes are setting the stage to have meaningful conversations, seek consensus and collaborate with finance functions in Kuwaiti companies. Companies are not only seeking to understand the financial impact and disclosure requirements of new taxes but also identify what changes in finance functions are necessary given that more resources will be dedicated to tax matters. This is in addition to recognizing which systems or tools will be required to support those responsible for tax matters in an organization and planning in advance where changes are required.”

“In our event, we will cover the potential changes to Kuwait’s corporate income tax framework and provide key information around BEPS Pillar 2 that businesses can leverage to plan ahead as further announcements are made by the Kuwait Government.”

The event will also comprise panel discussions on matters pertaining to tax as well as Kuwait’s economic landscape and include guest speakers: Daniel Kaye, Group Chief Economist, National Bank of Kuwait, Mubeen Khadir, Partner and Head of Tax & Corporate Services, KPMG in Bahrain, and Anand Krishnan, Director — International Tax Services, KPMG in Qatar. The in-person event will be held at the Four Seasons Hotel, Kuwait City, on 23 January 2024.

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