Kuwait levies no personal income tax on individuals and, unlike most GCC states, has still not implemented VAT. The India-Kuwait DTAA, in force since 17 October 2007 and updated by a 2018 Protocol, mainly protects an NRI's India-source income from double taxation, while foreign-owned businesses face a combined corporate tax and levy burden of roughly 18.5%.
No personal income tax, and no VAT
Kuwait does not impose personal income tax on individuals, whether resident or non-resident, and
there is no withholding tax on salary or wages paid to expatriate employees. Unlike most of the GCC,
Kuwait has also not implemented VAT, despite signing the 2017 GCC VAT framework agreement alongside the
other five member states; Kuwait's most recent fiscal plans have repeatedly deferred VAT implementation,
with the government instead exploring targeted excise duties on items like tobacco, energy drinks, and
luxury vehicles as a nearer-term revenue measure. NRIs should treat the VAT position as subject to
change -- Kuwait has signalled intent to eventually align with its GCC neighbours -- and check Kuwait's
Ministry of Finance for the current status before assuming the zero-VAT position will persist
indefinitely.
The India-Kuwait DTAA
India and Kuwait signed a Double Taxation Avoidance Agreement on 15 June 2006, which entered into
force 17 October 2007 and applies from 1 April 2008. A Protocol signed 15 January 2017 entered into
force 26 March 2018, updating the taxes-covered provision and substantially expanding the treaty's
exchange-of-information article to align with current international standards on tax transparency.
Because Kuwait does not tax individual income, the DTAA's practical value for salaried NRIs lies mainly
in protecting their India-source income -- rental income, interest on NRO deposits, capital gains on
Indian securities or property -- from double taxation, and in supporting non-resident status for Indian
tax purposes where residency questions arise under the treaty's tie-breaker provisions. NRIs earning
India-source income should still file the relevant Indian tax return and claim treaty relief through
the appropriate mechanism, since the DTAA does not automatically exempt income without a return being
filed.
Corporate tax and the new top-up tax for large groups
Foreign companies in Kuwait generally face a 15% corporate income tax on their share of profits, plus
a 1% Zakat contribution and a 2.5% National Labor Support Tax for Kuwaiti-listed entities, for a
combined effective burden of roughly 18.5% on the foreign-owned portion of a business, though Kuwaiti
nationals' shares in mixed ownership structures are generally not subject to the corporate tax itself.
For large multinational groups meeting a high consolidated-revenue threshold (broadly aligned with the
OECD's EUR 750 million test), a Domestic Minimum Top-Up Tax at an effective 15% rate applies from fiscal
years starting 1 January 2025 under Kuwait's implementation of the OECD's Pillar Two rules, replacing
the standard regime for those in-scope entities. This mainly affects large corporate groups rather than
individual NRI-owned businesses, which will typically continue under the standard 15% corporate tax
regime described above unless the business is part of a much larger multinational structure.
