On 30th August 2022, the Kuwait Ministry of Finance announced that the State of Kuwait (Kuwait) and United Arab Emirates (UAE) have signed a long awaited double tax treaty, the first of its kind signed by Kuwait with any Gulf Cooperation Council (GCC) member state.
How will it benefit both the countries?
It aims to strengthen the cooperation frameworks in tax matters and boost cross-border trade and investment between both the countries. It is expected to bring together the financial, economic, and investment partnership between both the countries.
The tax treaty between Kuwait and UAE attempts to take advantage of the growing investment opportunities, uplifting commercial trading and strengthening the development goals in both the regions by way of diversifying the sources of national income and offering complete protection for goods and services.
The double taxation treaty provides a more favourable tax treatment in substitution to each country’s domestic tax legislation in respect of many income taxes (corporate and personal) and withholding tax matters.
How will it impact you?
The tax treaty may reduce the taxation burden of UAE residents in Kuwait and vice versa. This is because the double taxation treaty will override domestic tax legislation. Multinational companies in both the regions will have to revisit their existing tax structures to assess the impact of DTT rules.
What will happen next?
Currently, the tax treaty is signed between Kuwait and UAE. It should be followed by the final ratification and finally be published in the official Gazette. From there, it will be put into force as per the official date declared.
How can IMC Group help?
Our tax expert team at IMC Group is keeping a close eye on the taxation matters in the UAE and Kuwait. We will keep you updated with the latest provisions of the tax treaty. For more information, get in touch with us!
