TaxSavvyKW

Head office interest in a Kuwait branch return

Can our Kuwait branch deduct interest charged by head office?

The situation

Interest paid to head office or related parties is not deductible per KPMG's summary.

The law

  • Amiri Decree No. 3 of 1955 as amended by Law No. 2 of 2008 (Income Tax Law): 15% tax on net profits of foreign corporate bodies doing business in Kuwait; Kuwaiti and GCC owned companies taxed only on their foreign ownership share

What it means for you

KPMG notes interest paid to head office or related parties is not deductible. Add it back in the declaration. Example: KWD 40,000 of head office interest added back raises tax by KWD 6,000 at 15%. Fund the branch with capital where possible.

What to do

  1. Identify related party interest.
  2. Add it back.
  3. Review funding.
  4. Document.

We can do this for youAnnual income tax declaration, payment and assessment for foreign companies: KWD 1,500

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