Kuwait’s new Executive Regulations on the recently enacted Law of Taxation on Multi-National Entities (MNE Tax Law): a necessary and effective tool to implement the MNE Tax Law.

Key aspects:

• The Regulations came into force on July 1, 2025, and set out how the EUR 750 million (approximately KWD 240 million) revenue threshold triggering application of the MNE Tax Law is met. Notably, “revenue” includes not only ordinary business and investment gains but also income from “excluded” entities not subject to the “top-up tax” (e.g. pension or investment funds and similar vehicles), with a deemed-consolidation method applying for groups of entities without published accounts.

• The Regulations widen the types of bodies that are subject to its application to include joint ventures, minority-owned constituent entities and investment entities. Sovereign wealth fund interests are carved out of the threshold calculation when strict conditions are met.

• A more robust “permanent-establishment” definition captures construction, agency and service activities in Kuwait exceeding six months and also extends to “stateless” permanent establishments.  The Tax Authority is empowered to implement standards to counter treaty abuse and artificial splitting of activities and agency structures designed to avoid PE status in Kuwait. 

• All entities subject to the law must register within 120 days of entry into force. For entities already in Kuwait, the deadline is 30 September 2025.

• Where a group of related entities operating in Kuwait are subject to the MNE Tax Law, one constituent entity is to be appointed to file a single audited return for every entity within 15 months of year-end and pay any top-up tax in one instalment and may be asked to lodge an OECD “GloBE Information Return” to enable other jurisdictions to verify the effective tax rate payable in relation to a group of entities. 

• The Regulations address safe harbours, restructuring and disputes resolution mechanisms.  However, they do not include tax retention obligation on taxable entities.

Multi-national companies are well advised to consult their auditors and legal counsel regarding the requirements and potential impact of Kuwait’s MNE Tax Law and its Executive Regulations.

Why it matters:

The Regulations offer much-needed detail on how the MNE Tax Law will operate and be implemented in Kuwait, with clear compliance obligations for large multi-national groups. Companies with cross-border structures or operations in Kuwait will need to assess whether they meet the revenue threshold and, if so, fulfill registration and disclosure requirements by prescribed deadlines to avoid penalty. 

How ASAR can support:

ASAR advises clients on tax compliance, cross-border structuring, and regulatory obligations, including:

• Assessing MNE group exposure under the new threshold and scope rules;
• Supporting clients in challenging assessments made by the Tax Authority through administrative and Court challenges. 

Legal reference:

The Executive Regulations were issued under Ministerial Decree No. 55 of 2025.