Kuwait’s Domestic Minimum Top-Up Tax: A Pillar Two Compliance Roadmap for In-Scope Groups

Kuwait has entered the first live compliance year of the most significant change to its corporate tax landscape in a generation. Decree-Law No. 157 of 2024, promulgating the Multinational Entity Group Tax Law, was issued on 31 December 2024 and introduced a Domestic Minimum Top-Up Tax (DMTT) that lifts the effective tax rate of large multinational groups operating in Kuwait to 15%. The Law applies to fiscal years beginning on or after 1 January 2025, and the Minister of Finance completed the framework with Executive Regulations issued in June 2025 under Ministerial Resolution No. 55 of 2025. With the first optional advance-tax cycle having closed on 30 June 2026 under Ministry of Finance Circular No. 1 of 2026, the regime’s obligations are no longer theoretical.

Why this matters

Kuwait has historically taxed only foreign corporate bodies on their Kuwait-sourced income at 15%, leaving GCC and Kuwaiti-owned companies outside the corporate income tax net (subject instead to Zakat, the National Labour Support Tax and KFAS contributions). The DMTT redraws that map. Any multinational group — whether headquartered in Kuwait or merely present here through a subsidiary, branch or joint venture — that meets the revenue threshold now sits inside a formal tax net, with registration, audit, filing and payment duties enforced by the Kuwait Tax Authority (KTA) and backed by monetary penalties. Kuwaiti family conglomerates and holding groups with cross-border operations fall squarely within the population the Law targets.

Who is in scope

The DMTT follows the OECD’s Pillar Two GloBE architecture. A group is in scope if it is a multinational enterprise — that is, it has constituent entities in more than one jurisdiction, including Kuwait — and its consolidated annual revenue equals or exceeds €750 million in at least two of the four fiscal years preceding the tested year. Purely domestic Kuwaiti businesses, with no presence outside the country, fall outside the regime. Where a group is in scope, the top-up tax is charged on the difference between 15% and the group’s effective tax rate in Kuwait, computed on GloBE income derived from the financial statements.

The compliance clock

Three deadlines define the regime. First, registration: in-scope entities had to register with the KTA within nine months of the Law taking effect — by 30 September 2025 for groups already in scope on 1 January 2025 — while newly in-scope entities must register within 120 days of crossing the threshold. The KTA’s electronic registration service opened in September 2025. Second, advance payment: Circular No. 1 of 2026 introduced an optional advance-tax mechanism, with applications due by 31 May 2026 and the provisional tax return and advance payment due by 30 June 2026 — a deadline that has now passed. Third, the annual return: the DMTT return must be filed within 15 months of the group’s fiscal year-end, accompanied by audited financial statements prepared by an auditor approved by the Ministry of Finance, including stand-alone audited financials for each in-scope Kuwaiti entity.

What 2026 actually demands

For a calendar-year group, the FY2025 return falls due in early 2027 — but the work is a 2026 workstream. In-scope groups need Ministry of Finance-approved auditors engaged now, stand-alone financial statements for every Kuwaiti constituent entity, and an effective-tax-rate model that maps Kuwaiti book income to GloBE income and quantifies the top-up exposure. Groups must also maintain accounting books and records for ten years from the end of the taxable period. The optional advance payment is not merely a cash-flow question: electing in — or out — carries consequences for penalty exposure and for the provisional-return position, and should be assessed deliberately rather than by default.

The cost of getting it wrong

The penalty regime has teeth. Failure to register by the deadline attracts a fixed penalty of KD 3,000 per entity. Broader non-compliance — late or inaccurate filing, or underpayment — can trigger a penalty of up to 25% of the unpaid tax, subject to a minimum of KD 5,000, whichever is higher. For a group with several Kuwaiti entities, per-entity exposure compounds quickly.

WEFAQ’s view

The DMTT rewards early, structured preparation over last-minute filing. Groups that have not yet confirmed whether they cross the €750 million threshold should do so before assuming the regime does not apply — the two-of-four-years test can pull in groups whose current-year revenue has dipped. Those that are in scope should treat registration status, auditor appointment and effective-tax-rate modelling as board-level items for 2026, not deferred compliance. WEFAQ advises multinational and family-group clients on scoping, registration, governance and the interaction between the DMTT and existing Kuwaiti tax and Zakat obligations.

This article is provided for general information only and does not constitute legal advice. For advice specific to your circumstances, please contact WEFAQ Law Firm.