Tax Figures
Corporate Income Tax
15% on taxable profits
Income Tax Rate
A 15% flat rate of income taxation is currently implemented in the country (before 2008 the tax rate was max. 55%).
Liability for income tax
Kuwait does not impose income taxes on income earned by individuals.
Tax trigger points
There is no personal tax in the state of Kuwait. However, there is corporate tax applicable to foreign corporations in Kuwait. The Kuwaiti tax law does not define the concept of resident/nonresident and permanent establishment. As a result, there may be corporate tax implications where representatives/employees of the supplying/invoicing foreign entities are present in the country.
In practice, the Kuwait Tax Authority (KTA) considers even a single day’s visit in Kuwait to create a taxable presence in the absence of a double tax treaty between the corporation’s country of tax residence and Kuwait.
Sales Tax
Currently not implemented.
Withholding Tax
The rate of withholding tax on dividends is 15%.
Income Tax (Personal Allowance)
There is no personal income tax (employment tax) in Kuwait.
Time to prepare and Pay Taxes
98 hours
Employers Social Security and statutory contributions
11.5% calculated on gross salary
Employees Social Security and statutory contributions
8% calculated on gross salary
Payroll
Kuwait applies a ‘source’ method to taxation, which means that, whilst tax is imposed only on the Kuwaiti-source income, a taxation liability can arise from activities not considered taxable in many jurisdictions.
The source of income is considered to be in Kuwait if the place of performance of services is within Kuwait. This includes, work carried out outside the country under a contract that also involves activity in Kuwait. Any significant presence of employees or short-term visits to Kuwait by representatives of a company may render the entire revenue from the transactions as taxable in Kuwait.
Remote Payroll
A remote payroll system is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Kuwait. Under Kuwait Law, companies registered in other countries are allowed to obtain a license to do business and have employees in the country.
Local Payroll Administration
In some cases, a company will register their business in Kuwait under one of the forms available: Limited liability company, Shareholding companies and Partnerships; but prefer to have another company administering its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Internal Payroll
Larger companies with a commitment to Kuwait may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Kuwait payroll, and can fulfil all tax, withholding, and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Kuwait employment laws.
Setting up payroll in Kuwait
Currency
KWD (Approx. 3.3 USD)
Employee Information Required
- Copy of nationality certificate.
- Copy of birth certificate or age assessment certificate.
- Copy of the appointment decision, for governmental authorities.
- Copy of Civil Identity Card.
Social Security Registration
The Social Security System requires the employer to provide the registration forms of the Kuwaiti employees who are working for him within ten days as from the date of joining the work, duly accompanied with the following documents:
- Copy of nationality certificate;
- Copy of birth certificate or age assessment certificate;
- Copy of the appointment decision, for governmental authorities;
- Copy of Civil Identity Card.
Documentation Required for New Employees
The Worker shall be employed by virtue of a Contract, verbal or in writing, comprising in particular the start date of appointment, wage agreed upon, term of the contract, if it is a fixed-term contract, and the nature of work. In case the Contract is concluded in a verbal form, the Employer and/or the Worker may by whatever means admissible prove the rights thereof.
Payment Mode
The payment of contributions and other due funds for the Public Institution for Social Security shall be made as follows:-
By virtue of a checks in the name of the Public Institution for Social Security;
Payment in cash to the Public Institution for Social Security treasury; or
Under a deposit advice for the Public Institution for Social Security`s account
Frequency of Salary Payment
Wages may be determined per hour, per day, per week, per month, or per piece. Wages shall be paid in one of official work days and at the workplace of the workers in the currency legally in circulation, subject to the following provisions:
- A worker appointed on a monthly pay shall be paid the wage thereof at least once per month;
- A worker paid per hour, day laborer, worker with a weekly wage, or worker paid on the piece-rate basis shall be paid the wage thereof at least once every two weeks;
- The Employer shall be prohibited to transfer a monthly paid worker to the category of day laborers or to category of workers appointed with a weekly wage or on a piece-rate basis except with the approval of the worker on transferring thereof.
Minimum Wage
In Kuwait, minimum wages vary depending on the job role and the job designation as on visa. On average, the monthly salary compensation is 100 KWD (Approx. USD 332).
