Why Kuwaiti customers hold 5% of invoices

The situation

Yes. Public bodies and private entities retain 5% of each payment to contractors until a tax clearance certificate is presented.

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

What it means for you

The retention protects the authority's tax claim. You recover it by filing returns, completing inspection and presenting the clearance certificate. The final payment must be at least 5% of contract value.

What to do

1. Register for tax.
2. File returns on time.
3. Complete inspection.
4. Present clearance to release retention.

Related

• Unclaimed retention after five years
• Final payment of at least 5%
• Retention return for contract owners
• Is retention a withholding tax
• Franchise royalties and retention
• DMTT tax card and government retention