Ministerial Resolution No. 29 of 2008 Issuing the Executive Regulations of Kuwait Income Tax Decree No. 3 of 1955 as Amended by Law No. 2 of 2008

Ministerial Resolution No. 29 of 2008
Issuing the Executive Regulations of Kuwait Income Tax Decree No. 3 of 1955 as Amended by Law No. 2 of 2008

Article One

The provisions of the Executive Regulations of Income Tax Decree No. (3) of 1955, as amended, and as amended by Law No. (2) of 2008, which shall be referred to by the word “the Decree” wherever it is mentioned or referred to in these Regulations, shall be applied.

In matters for which no provision is made in this Resolution and the Regulations, the Executive Rules and Instructions issued by the Minister of Finance or his delegate in application of the provisions of Kuwait Income Tax Decree No. (3) of 1955, as amended, shall be applied, and the resolutions previously issued shall remain in force in so far as they have not been amended.

Article Two

In application of the provision of Article Four of Law No. (2) of 2008 Amending Certain Provisions of Kuwait Income Tax Decree No. 3 of 1955:

1- The exemptions provided for in the said Law shall apply as of the day following the date of its publication in the Official Gazette, corresponding to 4/2/2008.

2- The provisions of the said Law shall apply as of the beginning of the body corporate’s taxable period following the date of its publication in the Official Gazette.

3- The provisions of the said Law shall apply to contracts that are deemed taxable periods for bodies corporate and that were signed after the publication of this Law.

4- Losses realised before the said Law came into force shall continue to be carried forward for a period of three years from the day following the date of publication of this Law.

Article Three

This Resolution shall be published in the Official Gazette.

Executive Regulations of Law No. 2 of 2008 Amending Certain Provisions of Kuwait Income Tax Decree No. 3 of 1955

Preliminary Chapter – Definitions

Article 1

For the purposes of applying the provisions of these Regulations, the following terms shall have the meanings assigned to each of them:
1) The Decree: Kuwait Income Tax Decree No. 3 of 1955 and the laws amending it.
2) Body Corporate: any entity having legal personality, wherever its place of incorporation, if it carries on business or trade in the State of Kuwait directly or through an agent, or carries on business or trade in the State of Kuwait as an agent for others.
3) The Agent: any natural or legal person authorised by his principal to carry on business or trade or any of the activities provided for by the law, or to conclude a binding agreement with a third party on behalf of his principal and for his account and within the authority vested in him, such that the profits of a Kuwaiti merchant arising from his sale of goods which he had purchased and transported for his own account shall not be subject to this tax
4) Taxpayer: any body corporate subject to the income tax imposed under the Decree.
5) Activity: any commercial, non-commercial, industrial, real estate, transport, contracting, engagement, speculation, brokerage or venture activity of a commercial nature, or the provision of a service for consideration of whatever kind, or the extraction of any natural resource from land or water.
6) Taxable Period: each calendar year of twelve (12) months ending on 31 December, unless the Tax Administration approves otherwise, provided that it does not exceed (18) months.
7) Accounting Period: the period for which the taxpayer prepares its accounts.
8) Gross Income: the gross income realised by the taxpayer before deducting the allowable deductions.
9) Net Income: the gross income realised by the taxpayer after deducting the allowable deductions.
10) Taxable Income: the net income.
11) Allowable Deductions: the allowable expenses and costs are those incurred by the body corporate in accordance with the provisions of the Decree and these Regulations.
12) Tax Return: a statement in which the taxpayer declares the amount of tax due from it and shows the results of its business during the taxable period
13) Tax: the income tax imposed on any body corporate under the provisions of the Decree and these Regulations.
14) Tax Director: the Minister of Finance or the person authorised by the Minister to exercise any of his powers.
15) The Tax Administration: the authority concerned with the application of these Regulations, being the employees authorised to perform the functions of the Tax Administration.
16) Tax Appeals Committee: one or more committees formed to consider the tax dispute in the appeal filed by the body corporate in accordance with the Executive Rules and Instructions.
17) The Executive Rules and Instructions: the rules and instructions issued by the Minister of Finance or his delegate, which contain the procedures regulating the implementation of the provisions of the Decree and its Executive Regulations.
Any term or expression not defined in the Decree and these Regulations shall bear the definition assigned to it under the relevant laws applicable in the State of Kuwait, to the extent that such definition does not conflict with the provisions of this Decree.

Chapter One – Income Tax

First – Sources of Income

Article 2

The application of the provisions of Article (1) of the aforementioned Law No. 2 of 2008 means that a body corporate carrying on an activity in the State of Kuwait and realising income during the taxable period shall be subject to tax, whatever its legal form, the capacity of its partners, its place of incorporation or the nature of its activity.
Taxable income shall be deemed to be realised from the State of Kuwait if it arises, for example, from:
1- Any activities or works performed wholly or partly in the State of Kuwait, whether the contract is concluded inside or outside Kuwait, as well as income realised from the supply or sale of goods or the provision of services.
2- Amounts received from the sale, lease or grant of a concession for the use or exploitation of any trademark, design, patent, copyright or printing rights, or other intangible rights or rights related to intellectual property rights, in consideration for the use of any publication right of literary, artistic or scientific works in any form whatsoever.
3- Commissions due or arising from commercial representation or brokerage agreements, whatever the form of such commissions, whether in cash or in kind.
4- Profits arising from any industrial or commercial activity in the State of Kuwait.
5- Profits realised from the disposal of assets, including disposal by sale of the asset or part thereof, transfer of its ownership to third parties, or other dispositions, including the disposal of shares in a company whose assets consist mainly of immovable property located in the State of Kuwait.
6- Income arising from lending funds within the State of Kuwait.
7- Profits arising from the purchase and sale in the State of Kuwait of property, goods or rights related thereto, whether such rights are attached to a tangible asset or are intangible rights, including the right of mortgage and the right of lien.
8- The opening of a permanent office in the State of Kuwait in which contracts of sale and purchase are concluded, being the place of business in which the activity is carried out or contracts are concluded, whether such place is owned by the taxpayer, leased from third parties, or located at the premises of third parties in the State of Kuwait.
9- Profits arising from the lease of any property, including movable and immovable property used in the State of Kuwait.
10- Profits arising from the provision of services, including fees for administrative, technical or consultancy services, or contracts concluded that are performed wholly or partly in the State of Kuwait, whether the contract is concluded inside or outside Kuwait.
11- Profits arising from carrying on activity on the Kuwait Stock Exchange, whether directly or through portfolios or investment funds.

Second – Taxable Income

Article 3

The income of a body corporate subject to tax shall be determined on the basis of the gross income arising from operations of all kinds after deducting the allowable expenses and costs.
The allowable expenses and costs shall satisfy the following conditions:
1- They shall be necessary for generating the income arising from the activity.
2- They shall be genuine and supported by documents.
3- They shall relate to the taxable period.
Expenses and costs include the following:
1- Raw materials, consumables and services necessary for the purposes of the activity.
2- Salaries, wages and end-of-service indemnities paid, and the like.
3- Taxes and fees, except the income tax paid in accordance with the Decree.
4- Depreciation of the assets used in the activity, according to the rates specified in Article (4) of these Regulations.
5- Donations or gifts paid to government entities in the State of Kuwait.
6- Gifts, donations and subsidies paid to licensed private Kuwaiti entities in the State of Kuwait, such as charitable and social bodies and societies, provided that the deduction does not exceed (2.5%) of the net income of the body corporate before allowing this deduction.
7- Head office expenses according to the percentages specified in Article (5) of these Regulations.
Gross income and the allowable expenses and costs shall be determined in accordance with the International Accounting Standards applied in the State of Kuwait and consistently with the provisions of the Decree and these Regulations.

Article 4

Depreciation of the assets owned by the body corporate and used by it in carrying on business or trade in the State of Kuwait shall be accounted for by the straight-line method as shown in the following table:

Asset type	Annual depreciation rate
Buildings	4%
Prefabricated buildings	15%
Furniture and office equipment	15%
Machinery and equipment	20%
Drilling equipment	25%
Electrical and electronic equipment	15%
Computers and their accessories	33.3%
Software	25%
Motor vehicles	20%
Trucks and transport vehicles	15%
Buses	20%

The Director of Income Tax may depart from what is specified in the said table if the operating conditions of the asset depart from what is customary or usual for the activity in which the asset is used. The taxpayer may request the Tax Administration to calculate the depreciation charge by any method other than the straight-line method, ninety (90) days before the due date for filing the tax return, and the Tax Administration may grant such request if it is based on reasonable grounds in accordance with tax accounting rules and principles.

Article 5

Head office expenses shall be accounted for on the direct revenues realised in the State of Kuwait after deducting the following:
1- Work performed by subcontractors and those in their position.
2- Incidental revenues.
3- Reimbursed costs.
4- Design costs (except design costs from the head office)
The branch’s share of head office expenses shall be according to the following specified percentages:
1- Bodies corporate operating in the State of Kuwait are permitted to calculate and add the equivalent of (1.5%) of the direct revenues realised in the State of Kuwait, less what is mentioned in paragraph (1) of this Article.
2- Bodies corporate that are partners in Kuwaiti establishments or companies, or that participate with Kuwaiti establishments or companies in executing a contract, are permitted to calculate and add the equivalent of (1%) of the direct revenues realised in the State of Kuwait, less what is mentioned in paragraph 1 of this Article, out of the foreign partner’s share.
3- Bodies corporate operating in the field of insurance in the State of Kuwait are permitted to calculate and add the equivalent of (1.5%) of direct premiums, less the reinsurance share and plus the insurance commissions collected.
4- Bodies corporate operating in banking activity in the State of Kuwait are permitted to calculate and add the equivalent of (1.5%) of the direct revenues realised in the State of Kuwait, less what is mentioned in paragraph 1 of this Article.

Article 6

Expenses and costs incurred by bodies corporate that do not relate to the taxable activity in the State of Kuwait, or that are not necessary for generating profit, shall not be allowed as deductions, including:
(a) Personal and private expenditure.
(b) Criminal fines.
(c) Compensated losses.
(d) Provisions and reserves of whatever kind, except certain reserves of banks and insurance companies provided for in the Executive Rules and Instructions of the Decree.
The Tax Administration may request the reconsideration of any expenses it deems excessive and the submission of documents proving and justifying such expenses, and it may approve, adjust or disallow such expenses.

Third – Losses

Article 7

Losses shall be carried forward as follows:
1- If the account of any year closes with a loss, such loss shall be deducted from the net income of the following year; if the net income is not sufficient to cover the entire loss, the remainder shall be carried to the second year; and if any loss from that year remains thereafter, it shall be carried to the third year. Any loss remaining after the third year may not be carried forward.
2- A loss shall not be carried forward in the event of cessation of the activity, consisting in the body corporate notifying the Ministry of such cessation in order to terminate all aspects of its activity, or for any reason that does not include forced cessation.
3- A body corporate shall be deemed to have ceased and shall not be entitled to carry forward losses if it files a tax return devoid of any revenues arising from its principal activity, or shows only incidental revenues in its return.
4- Periods of forced cessation of the activity shall not be counted among the periods provided for in the preceding paragraphs if the body corporate terminated its activity that generated such loss for a reason beyond its control, such as force majeure or emergency circumstances.
5- The right of any body corporate to carry forward a loss not deducted during the tax period or periods relating to carrying on the activity that generated such loss shall lapse in the following cases:
(a) Liquidation of the body corporate.
(b) Change of the legal form of the body corporate, or its dissolution.
(c) Merger of the body corporate into another body corporate.

Chapter Two – Exemptions

Article 8

Without prejudice to the exemptions established for persons subject to the provisions of the Decree and the provisions contained in other laws or in international agreements issued by laws, which shall remain in force until the expiry of the period established for them and within the limits set out therein, the following shall be exempt from tax:
1- The profits of a body corporate arising solely from trading operations on the Kuwait Stock Exchange, whether carried out directly or through portfolios or investment funds.
2- Income realised by a natural person from carrying on trade or business in the State of Kuwait, unless it is proven to represent a share of a body corporate.

Chapter Three – Amount of the Tax

Article 9

The amount of tax applicable to the taxable income of a body corporate shall be determined at the rate of fifteen percent (15%) of the net taxable income of the body corporate.

Chapter Four – Annual Nature of the Tax

Article 10

The tax imposed under this Law shall be assessed annually on the taxable income.
The first financial period adopted for filing the tax return shall be a calendar year (12 months), and the taxpayer may adopt an accounting period different from the calendar year before filing the tax return, not exceeding 18 months, after the approval of the Tax Administration thereof.

Chapter Five – Obligations

First – Registration

Article 11

Every body corporate shall apply for registration with the Tax Administration within thirty (30) days of the date of commencement of the activity or signature of the contract, provided that the registration data include the following:
1- The name and address of the body corporate inside and outside the State of Kuwait.
2- The date of commencement of the activity or the contract.
3- The name and address of the agent, and the agency agreement.
4- Any other data requested by the Tax Administration as required for the application of the Decree.
Every body corporate shall notify the Tax Administration of any change that may affect its tax obligations under the provisions of the Decree or the Executive Rules and Instructions, within thirty (30) days of the date on which the change occurs; it shall also notify the Tax Administration that it has ceased its activity within thirty (30) days of the date on which the activity ceased.

Article 12

Every body corporate subject to tax under the provisions of the Decree shall submit an application to the Tax Administration for the issuance of a tax card and shall attach the following documents to the application:
1- A copy of the memorandum of association of the body corporate.
2- A copy of the agency contract and the agency registration certificate issued by the Ministry of Commerce and Industry.
3- A statement of the address of the body corporate inside and outside the State of Kuwait; all correspondence made to this address shall be deemed valid and effective.
Government entities and public or private establishments or bodies are prohibited from dealing with any body corporate that does not hold a valid tax card, except for procedures relating to registration and obtaining licences to commence the activity; and every body corporate shall present its tax card to the competent entity or the establishment or body concerned.

Second – Filing of the Tax Return

Article 13

Every body corporate subject to tax shall file with the Tax Administration a tax return drawn up in Arabic on the form attached to the Executive Rules and Instructions, showing the taxable income for the taxable period and the amount of tax due from it.
Bodies corporate exempt from tax under the provisions of the Decree, any international agreement or any other law shall not be exempt from filing the tax return.
The tax return shall be filed with the Tax Administration on or before the fifteenth day of the fourth month following the end of the taxable period of the body corporate, and there shall be attached to the return a report certified by an auditor registered with the Ministry of Commerce and Industry and approved by the Ministry of Finance, accompanied by the following papers and documents:
1- The balance sheet and final accounts for the taxable period for which the return is filed.
2- A schedule of assets showing the date of purchase of each asset, its value, the depreciation rate used, the depreciation charge, additions, and disposals of the asset.
3- A schedule of subcontractors and the last payment certificate for each of them, showing the work completed during the taxable period for which the return is filed and the amounts withheld in accordance with Article (37) of these Regulations.
4- A stock-taking schedule of closing inventory by quantity and value.
5- Copies of the contracts in progress and the amount of revenue and expenditure of each contract according to the data contained in the tax return.
6- The trial balance with totals and balances, which was used as the basis for preparing the final accounts and the tax return.
7- The last payment certificate issued by the project owner.
8- Insurance companies shall attach to the balance sheet and the tax return a detailed schedule of the reinsured policies and the conditions relating thereto.
The data contained in the tax return certified by the auditor shall be deemed correct unless the Tax Administration finds otherwise.
The Tax Administration may accept an amended tax return to correct any error in the tax return filed for a previous taxable year, when filed by the taxpayer in accordance with the Executive Rules and Instructions.
The management of investment funds, investment trustees and companies managing portfolios for the account of bodies corporate subject to the Decree shall provide the Tax Administration with a statement including all profits arising from dividends on shares held with them or managed for a body corporate, or any profits arising from carrying on any taxable activity in investment portfolios or funds, in accordance with the Executive Rules and Instructions.

Article 14

The Tax Administration may extend the deadline for filing the tax return if the taxpayer so requests, subject to the following conditions:
1- The request shall be submitted on or before the fifteenth day of the second month following the end of the taxable period.
2- The reasons for the extension shall be necessary and acceptable.
The Tax Administration may respond to the request within a period not exceeding thirty (30) days from the date of submission of the request, and failure to respond within said period shall be deemed a decision of rejection. The extension of the deadline may not be approved for more than sixty (60) days, starting from the day following the end of the original deadline for filing the tax return. If the request for extension of the deadline for filing the tax return is not submitted within the time limit stated in Clause (1) of this Article, it shall not be considered and the request shall be deemed as if it had never been made.

Third – Bookkeeping

Article 15

Every taxpayer subject to the provisions of the Decree shall keep the documents supporting the accounts, and the following books and records:
1- The general journal.
2- The inventory book.
3- The general ledger.
4- The expense analysis book.
5- The materials register showing the quantities received and issued and the party or project to which they were issued.
Such books and records shall be prepared in accordance with the provisions of the relevant Kuwaiti laws.
Bodies corporate may use electronic systems in preparing their accounts, provided that such systems satisfy the accounting data required as provided for in the provisions of this Article, and provided that the Tax Administration is furnished with a copy of what has been recorded in the electronic systems for any taxable period whenever so requested.

Fourth – Reporting

Article 16

The ministries, public authorities, public institutions, companies, associations and sole proprietorships shall notify the Tax Administration of the bodies corporate with which they have concluded contracts, agreements or dealings, such as main contractors, subcontractors, suppliers and beneficiaries in any form whatsoever, and the notification shall include the following data:
1- The name and address of the party contracted with directly or by subcontract.
2- The type, value, date of conclusion and duration of the contract.
3- Any other data necessary for the performance of the contract.

Article 17

All authorities competent to authenticate and register documents, to issue licences for carrying on or renewing any activity, and to certify customs declarations shall, upon carrying out such procedures for a taxpayer, notify the Tax Administration within thirty (30) days from the date of taking any procedure, in accordance with the Executive Rules and Instructions.

Chapter Six – Methods and Procedures of Tax Assessment

Article 18

The tax shall be assessed on the basis of the net taxable income as determined by the tax return, where such tax return is accepted by the Tax Administration. The Tax Administration shall have the right to correct or amend the return, and it may also disregard it and determine the income on an estimated basis in accordance with the provisions of Article (19) of these Regulations.

Article 19

The Tax Administration shall have the right to assess the tax on an estimated basis in all cases in which it is not possible to assess the tax on the basis of the taxpayer’s actual net income, including the following cases:
1- If the taxpayer does not submit the tax return or any of its attachments, or submits any of the foregoing after the final deadline set for submitting the return.
2- If the taxpayer does not comply with making available the books, records and documents necessary for examination after two appointments have been set for that purpose by official letters.
3- If the taxpayer refuses to submit the information, documents or explanations requested by the Tax Administration, or submits information or documents that do not show its actual taxable income.
4- If the documents supporting the accounts are unavailable, or contain information with major deficiencies, or the documents do not match the records in a manner that affects the true taxable income.
The estimated assessment provided for in the first paragraph of this Article shall be made on the basis of the data, information and presumptions available to the Tax Administration.

Article 20

The Tax Administration shall notify the taxpayer of the tax assessment directly or by registered letter with acknowledgement of receipt, provided that the notification includes the net taxable income and the tax due. The taxpayer shall pay the tax due within thirty (30) days from the date of his notification of the tax assessment letter.

Article 21

The Tax Administration shall have the right to reissue the tax assessment on the taxpayer with respect to years previously assessed, in the following cases:
1- If the Tax Administration discovers information relating to revenues of the taxpayer that was not disclosed by the taxpayer.
2- If the taxpayer has used any fraudulent means, including:
(a) Concealing data or stating incorrect data, whether in the return or in the papers submitted to the Tax Administration, relating to the determination of the taxable income.
(b) Fabricating incorrect accounts, books, records or documents, or destroying or concealing the correct ones.
(c) Concealing one or more taxable activities.
The tax assessment shall be reissued within five (5) years from the date of discovering the information or the fraudulent means, in accordance with paragraph (1) of this Article.
The reissuance of the tax assessment shall include the grounds on which it is based, and the taxpayer shall be notified thereof.
The taxpayer may object to and appeal against the reissuance of the tax assessment in accordance with the provisions of these Regulations.

Article 22

The Tax Administration may correct any arithmetical or clerical errors before the expiry of the limitation periods provided for in Article (13 bis) of the Decree, whether at the request of the taxpayer or on its own initiative.

Article 23

If the taxpayer ceases to carry on a taxable activity, tax shall be imposed on the income up to the date on which the activity ceased.
The assignment of the body corporate or the activity, or of any part of either, shall be deemed a cessation, and both the assigning taxpayer and the assignee shall be jointly liable for the tax debt due on the income of the body corporate from the beginning of the taxable period until the date of assignment.

Chapter Seven – Objections and Appeals

First – Objection

Article 24

The taxpayer may object to the tax assessment within sixty (60) days from the date of his notification of the assessment letter, and he shall state the grounds for the objection and attach to his objection to the Tax Administration the documents supporting it.
If the period referred to in this Article expires without the taxpayer objecting, the tax assessment shall be deemed final and the tax shall become payable.

Article 25

The Tax Administration shall decide on the objection within ninety (90) days from the date of its submission, and failure to respond to the objection shall be deemed an implicit rejection thereof.
If the Tax Administration and the taxpayer agree on determining the tax due within the period referred to in paragraph 1 of this Article, the tax shall be assessed in accordance with the agreement and shall become final and payable.

Second – Appeal

Article 26

The taxpayer may appeal against the rejection decision issued by the Tax Administration before the Tax Appeals Committee within thirty (30) days from the date of his notification of the rejection decision, or from the date of expiry of the period set for deciding on the objection without a response to the objection.
The appeal shall be made by a request submitted to the Tax Appeals Committee, accompanied by all documents supporting the appeal, in accordance with the Executive Rules and Instructions.
If the period referred to in paragraph 1 of this Article expires without the taxpayer appealing, the tax assessment shall be deemed final and the tax shall become payable.
The taxpayer may not submit a request for reconsideration of the assessment once the tax assessment has become final at any of its stages.

Article 27

The Tax Administration and the taxpayer may appeal against the decision of the Tax Appeals Committee before the competent court within sixty (60) days from the date of notification of the decision of the Tax Appeals Committee by registered letter with acknowledgement of receipt.
If the period referred to in paragraph 1 of this Article expires without an appeal being made, the decision of the Tax Appeals Committee shall become final and the tax shall be payable.

Chapter Eight – Collection of the Tax

Article 28

The taxpayer shall pay the tax due from him under the tax return in a single payment or in four (4) equal instalments, in accordance with the provision of Article Eight (8) of the Decree.
In cases where the Tax Administration agrees to grant the body corporate an extension of time to submit the tax return, the body corporate shall pay the instalments due up to the date of submitting the tax return in a single payment upon its submission.

Article 29

If a tax assessment is issued within the twelve months following the end of the taxable period and includes tax exceeding the amount of tax due according to the tax return, the tax difference shall be distributed equally over the number of instalments, and the portion pertaining to the previous instalments shall be paid in a single payment within thirty (30) days from the date of notification of the assessment letter.

Article 30

If the tax assessment is issued after the twelve months following the end of the tax period and includes tax exceeding the amount of tax due according to the tax return, the tax difference shall be distributed equally over the number of instalments, and the portion pertaining to the previous instalments shall be paid in a single payment within thirty (30) days from the date of notification of the assessment letter.

Article 31

In cases where the provisions of paragraph 2 of Article (25) of these Regulations apply, each taxpayer shall pay the tax within thirty (30) days from the date of notification of the letter amending the assessment.
In cases where the period for objection or appeal provided for in Articles (24, 26, 28) of these Regulations expires, the taxpayer shall pay the tax within thirty (30) days from the date on which the tax debt became final.
In cases where the provisions of paragraphs 1 and 2 of this Article do not apply, the tax and penalties due shall be collected in a single payment within thirty (30) days from the date of notification of the assessment letter.

Article 32

Subject to the provisions of Article (33) of these Regulations, the tax and penalties finally due shall be payable under the notifications issued by the Tax Administration by registered letters with acknowledgement of receipt.

Article 33

A taxpayer may authorise another person to pay the tax on its behalf, provided that the Tax Administration is notified in advance of such authorisation and that both shall be jointly liable for the tax debt. Government entities, public authorities and public institutions are excepted therefrom. All of the foregoing shall be in accordance with the Executive Rules and Instructions.

Chapter Nine – Fines

Article 34

A penalty shall be calculated at the rate of (1%) for each thirty (30) days or part thereof in the following cases:
1- Late filing of the tax return, from the date on which it is due to be filed until the date of filing, on the basis of the tax according to the tax return.
2- Failure to file the tax return, from the date on which it is due to be filed until the date of the assessment letter, on the tax due according to the assessment.
3- Late payment of tax instalments according to the tax return, from the due date of each instalment until the date of its payment, on the basis of the instalment amount.
4- Late payment of the tax due according to the final assessment after thirty (30) days from the date of notification of the assessment letter, the response to the objection, the decision of the Tax Appeals Committee or the final court judgment, until the date of payment.

Chapter Ten – Guarantees for the Collection of the Tax

Article 35

The Tax Administration may, in any case where the tax debt is at risk of being lost, take either or both of the following two measures:
1- Take the necessary measures to obtain an order from the competent court to attach the funds or property of the taxpayer which the Tax Administration considers sufficient to pay the tax debt and the penalties due, regardless of the person in possession of the funds or property. The funds or property shall be deemed to have been placed under precautionary attachment once the taxpayer has been notified of the attachment order in accordance with the applicable procedures, and the taxpayer shall not be entitled to dispose of the funds or property unless the attachment is lifted by a decision of the competent court in accordance with the legal procedures prescribed in this regard.
2- Take the necessary measures to obtain an order preventing the taxpayer from leaving the State of Kuwait unless he pays the tax on the date specified in the notification or provides sufficient security to cover the tax and the penalties due. The taxpayer shall be notified of the said order, and the legal procedures in force in this regard shall be taken.

Article 36

If the tax and penalties are final and payable and have not been paid on the date specified in the notification, the Tax Administration may take the necessary measures to impose, through the competent court, an executory attachment on the property of the debtor, whether in his possession or in the possession of any other person. In this case, the Tax Administration shall issue a notification to the taxpayer stating the amount of the tax and penalties due.

Article 37

1- The ministries, public authorities, public institutions, companies, associations, sole proprietorships or any natural person, and others not mentioned as specified in the Executive Rules and Instructions, shall withhold from taxpayers (5%) of the contract value or of each payment made to the taxpayers with whom they have concluded contracts, agreements or transactions.
2- Upon examination for the calculation of the tax imposed under the Decree, the Tax Administration shall exclude the amounts paid to subcontractors if any body corporate has not notified the Tax Administration of the subcontractors or has not complied with withholding (5%) in accordance with the provisions of Paragraph (1) of this Article.

Article 38

All or part of the withheld amounts may not be released except with the approval of the Tax Administration, upon a letter requesting the release of such amounts, in the following cases:
1- If the body corporate is not subject to tax, is exempt therefrom, or has incurred a loss.
2- If the body corporate has paid all tax dues owed by it.
3- If the body corporate has provided an approved bank guarantee or any other guarantee acceptable to the Tax Administration to settle the tax dues owed by it.
The Executive Rules and Instructions shall regulate the procedures and conditions relating to the release of the income tax guarantee retention.

Article 39

All ministries, public authorities, public institutions, companies, associations, sole proprietorships or any natural person, and others not mentioned as specified in the Executive Rules and Instructions, shall remit to the Tax Administration the amount of the taxes and penalties due from the body corporate, deducted from the guarantee retention relating to companies and from all deposits and financial guarantees held by them, whenever requested to do so by a letter from the Tax Administration.
The entities referred to in the preceding paragraph shall, when remitting the said amounts, provide the Tax Administration with any information it requests for the application and implementation of the Decree. In the event of a violation of this Article, the violator shall be liable for paying the tax debt due from the taxpayer.
In the event that the ministries, public authorities, public institutions, companies, associations, sole proprietorships or any natural person, and others not mentioned as specified in the Executive Rules and Instructions, fail to withhold and remit in accordance with the provisions of Article (37) and Paragraph (1) of this Article, the violator shall also be liable for paying the tax debt due from the body corporate.

Article 40

The tax and penalties due under the Decree shall be a privileged debt on all the funds of the taxpayer or of whoever is obliged to remit them to the Public Treasury, and shall have priority over all other debts and obligations, except salaries, wages and judicial expenses.

Chapter Eleven – Limitation

Article 41

The right to collect taxes shall not lapse except upon the expiry of five years from the date on which the body corporate submitted the tax return, or from the date on which the Tax Administration became aware of the elements of the activities that the body corporate did not disclose in the tax return, or from the date of becoming aware of the data that it concealed relating to its tax obligations.
The limitation period provided for in Paragraph (1) of this Article shall be interrupted upon notification of the taxpayer of the tax assessment by registered letter with acknowledgement of receipt, or notification to pay the tax due by registered letter with acknowledgement of receipt, or by the decision of the Tax Appeals Committee by registered letter with acknowledgement of receipt, in addition to the grounds for interruption of limitation set out in the Civil Code. In all cases, the right of the Tax Administration to collect the tax and penalties that have become final in accordance with the provisions of the Decree shall not lapse.

Article 42

The taxpayer shall have the right to claim a refund of the amounts overpaid by him after the settlement of the tax position, within five (5) years from the date of notification of the final settlement of the tax position or the date on which the taxpayer became aware of his right to a refund of the overpaid tax, whichever is earlier.
After the expiry of the five-year period referred to in Paragraph (1) of this Article, the taxpayer’s right to recover the overpaid tax shall lapse.

Chapter Twelve – Final Provisions

Article 43

One or more committees shall be formed to consider appeals, in order to settle disputes arising between the Tax Administration and bodies corporate in relation to the assessment and collection of tax, in a manner that ensures their neutrality and strengthens them with specialised legal and technical expertise.
The Executive Rules and Instructions shall set out the procedures of the Tax Appeals Committee.

Article 44

The Tax Administration may cancel any agreement or action aimed at avoiding the tax imposed under this Decree.

Article 45

The personnel of the Tax Administration shall have the right to inspect all documents, papers, files and other information that may relate to the tax assessment, whether in the possession of the taxpayer, the agent, another person or any entity, and information may not be withheld from the Tax Administration for any reason whatsoever.

Article 46

The export or re-export of devices, equipment, machinery and any other materials which the body corporate that has carried on business or trade in the State of Kuwait has imported from abroad or obtained from the State of Kuwait for the purposes of carrying on business may not be permitted except upon submission of a certificate issued by the Tax Administration evidencing its clearance of its tax dues. Likewise, investment companies or banks that manage portfolios or funds or hold shares in custody may not pay the dues of bodies corporate except after deducting the income tax due, and the said companies and banks shall remit the income tax due to the Tax Administration within (30) days from the date of deduction, accompanied by a statement containing the names of the bodies corporate and the tax deducted for each of them.

Article 47

The Tax Administration may not issue a tax clearance certificate to a body corporate that has concluded contracts, agreements or transactions with bodies corporate except after submission of the data set out in the Executive Rules and Instructions.
The regulatory authorities concerned with approving and adopting the annual balance sheets of funds, companies and banks that manage portfolios may not do so unless such funds, companies and banks have paid all the tax dues owed by the bodies corporate.

Article 48

The Tax Administration shall issue, by a decision of the Tax Director, a list of the names of the audit firms approved by it and with which it accepts to deal as representatives of the taxpayer, provided that the list is reviewed annually by deletion or amendment.
The removal of one or more of these firms in subsequent years shall be subject to obtaining the approval of the Tax Director based on the facts or evidence submitted by the Tax Administration to prove a violation of the principles of the accounting and auditing profession, and the period of removal of a firm shall range from one year to three years.
Affected firms may file a grievance against such removal with the Tax Director within sixty (60) days from the date of their becoming aware of the decision, and the Tax Director may refer such grievance to a committee formed to consider the grievances submitted by affected firms.

Issued on 10 July 2008 and published in the Official Gazette Kuwait Al-Youm on 3 August 2008.