TaxSavvyKW

Tax card and the 5% retention

Will having a tax card stop customers retaining 5%?

The situation

Retention continues until the recipient presents a tax clearance certificate, not just a tax card. Under the FY 2026/27 budget rules, government bodies need not retain from DMTT tax card holders.

The law

  • Income Tax Law Executive Bylaws: 5% tax retention: Public and private contract owners retain 5% of each payment to contractors and suppliers until a tax clearance certificate is shown; final payment at least 5% of contract value
  • Executive rules for the FY 2026/2027 State budget: Government bodies keep retaining 5%; DMTT tax card holders are exempt from retention; balances older than five years go to the MOF

What it means for you

A normal tax card does not end retention. Clearance comes after filing and inspection. Only DMTT tax card holders are relieved, and only for government retention per the budget rules.

What to do

  1. Get a tax card.
  2. File returns.
  3. Request clearance.
  4. Present it to release retention.

We can do this for youTax registration and annual tax card for a foreign company or foreign owned share: KWD 300

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