TaxSavvyKW

PE disputes under Kuwait treaties

Kuwait says we have a PE but the treaty says we do not. Who is right?

The situation

PwC notes the authority's treaty interpretation is not always aligned with taxpayers or OECD guidance, especially on PE existence.

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
  • Income Tax Law: objections and appeals: Object within 60 days of assessment; the authority decides within 90 days; appeal to the Tax Appeals Committee within 30 days

What it means for you

PwC notes the authority's treaty reading is not always aligned with taxpayers or OECD guidance, with PE existence a frequent dispute. Document staff days, roles and contract scope against the treaty's PE article. Object within 60 days and appeal if needed.

What to do

  1. Map staff days and roles.
  2. Test the treaty PE article.
  3. Object within 60 days.
  4. Appeal if needed.

We can do this for youTreaty relief claims in the Kuwait tax return (including India Kuwait DTAA): KWD 800

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