Kuwait has taken a major step towards fiscal reform by introducing executive regulations for its new Domestic Minimum Top-up Tax (DMTT), targeted at large multinational enterprises (MNEs) operating in the country. The tax is expected to generate approximately 250 million Kuwaiti dinars ($819 million) annually, as part of Kuwait Vision 2035, the national plan to reduce economic dependence on oil.
This regulation reflects Kuwait’s commitment to international tax fairness and justice principles. It focuses on MNE groups that have global revenues exceeding €750 million, in line with the Organisation for Economic Co-operation and Development’s (OECD) Pillar Two framework.
Pillar Two ensures large corporations pay a minimum 15% tax on profits in every operating jurisdiction. Kuwait enacted Decree-Law No. 157 on 31 December 2024, implementing the DMTT at this 15% rate. This aligns with OECD standards to combat profit shifting and retain domestic revenues.
The DMTT applies to MNE groups that meet all of the following conditions:
• Operate in more than one country
• Have total consolidated revenues of at least €750 million
• Earn profits in Kuwait
The Implications
Kuwait has long been a low-tax environment, which made it attractive for foreign investors. However, the government sees the shift as a necessary step for the nation. Finance Minister Noura Sulaiman Al-Fassam states that the new tax will support Kuwait’s ability to build a “resilient and sustainable economy”.
From a commercial standpoint, there are some potential consequences. Affected multinational entities may need to restructure and reassess their model in Kuwait. Foreign companies that benefited from low-tax vehicles will now need to reconsider the contractual relationships they have and any operational frameworks. The DMTT increases compliance complexity or, in a worst-case scenario, risk exposure (e.g. misreporting or failed audits). Long-term supply contracts and agreements that were priced on the assumption of a low/zero-tax climate will require revision. Parties must decide on the tax incidence and how the increased cost burden is to be shared or passed through to the consumer.
From a regulatory lens, we may see a rise in statutory and administrative filings demanded from foreign companies. Firms could face more stringent registration criteria, and Kuwaiti regulators may begin asserting stronger oversight over profit arrangements or establishment status, all of which will need to be aligned with new domestic laws.
The Ministry of Finance (MOF) issued Ministerial Order No. 55 of 2025 on the 29th of June 2025, setting out the Bylaws of the DMTT Law. The MOF is also expected to support businesses through the transition via a series of awareness workshops. These sessions will provide guidance on how the new tax framework functions and how companies can comply. Kuwait’s efforts offer some clarity in navigating a new phase of tax transparency and economic modernisation.
Looking Ahead
The deadline for firms registering with the Kuwait Tax Authorities is the 30th September 2025. Kuwait will be monitoring the initial tax revenues generated from the DMTT to check alignment with the projected 250 million Kuwaiti dinars. Any deviations could prompt adjustments.
While the DMTT focuses on corporation tax, it does resurface discussions around the imposition of a VAT in Kuwait. Neighbouring states like Saudi Arabia and Bahrain have implemented VAT in recent years, which has provided a strong source of tax revenue for government spending.
The DMTT is a cornerstone of Kuwait’s Vision 2035 agenda in diversifying its economy. The success of its reforms will rest on effective implementation, flexible policymaking, and collaboration between stakeholders.
Written by: Habibul Islam
Sources: MSN, Fast Company Middle East, Arab Times Kuwait
