Kuwait has announced new executive regulations for its tax on multinational entities, expecting the new levy to generate 250 million Kuwaiti dinars (approximately $819 million) in annual revenue. The Ministry of Finance stated that these regulations provide clarity on the introduction of a supplementary domestic minimum tax (DMTT) within the framework of the multinational entities (MNEs) group tax.

The ministry explained that the regulations are designed to interpret and clarify the law’s provisions, define procedures and implementation mechanisms, enhance transparency, and ensure that relevant parties have a clear understanding of the tax process. Although the tax rate was not specified, it was previously indicated that Kuwait plans to impose a 15 percent tax on multinationals.

Noura Sulaiman Al-Fassam, the Minister of Finance and Minister of State for Economic Affairs and Investment, noted that this new legislation aligns with Kuwait’s strategy to diversify its revenues away from the oil sector. She highlighted that the issuance of these regulations marks a significant milestone in economic reform, as they contribute to creating a fair investment environment and promoting tax justice. Preliminary estimates suggest that the tax could indeed raise about 250 million Kuwaiti dinars, which would enhance the state’s capacity to build a resilient and sustainable economy.

The DMTT will apply to multinational entities, whether Kuwaiti or foreign, that operate across multiple countries and whose total revenues meet or exceed €750 million ($885 million) in the consolidated financial statements of their parent entity for at least two of the four tax periods leading up to the full year 2025, according to a note from consultancy KPMG. Additionally, multinational entities are required to register by September 30 of this year.

This new tax framework aligns with the Organisation for Economic Co-operation and Development’s Pillar Two programme, which aims to establish a global minimum corporate tax to ensure that large multinational enterprises pay at least 15 percent tax on profits in every country where they operate. The OECD projected that the global minimum tax could yield about $220 billion in additional annual revenue, representing 9 percent of global corporate income tax revenue.

In a related development, the UAE also imposed the DMTT on large companies last year as part of its corporate tax law reforms, requiring a minimum tax rate of 15 percent on profits generated in the UAE starting from January 1, 2025. Similar measures have been announced by Bahrain, which will introduce the DMTT for large multinationals beginning January 1.

As Gulf countries seek to diversify their economies beyond oil, Oman is set to become the first in the region to introduce a personal income tax starting in 2028. The newly introduced Personal Income Tax Law will impose a 5 percent tax on annual income exceeding 42 000 Omani rials ($109 236). This law will target specific types of income as defined by the legislation, marking a significant shift in the region’s tax landscape.