TaxSavvyKW

5% tax retention compliance and tax clearance certificate

We set up 5% retention on qualifying payments, file the retention return with contracts, and for contractors we obtain the tax clearance certificate that releases retained money.

KWD 600Per contract and yearly

For: Kuwaiti companies paying contractors and suppliers, government contractors, and foreign contractors waiting for retained amounts.

What we need from you

  • Contract list with values

    Retention base

  • Payment schedules

    Retention timing

  • Contractor tax status

    Release conditions

  • Tax clearance certificates received

    Release

  • Retention return filings to date

    Compliance check

What we discuss

  • Are you a public body or a private contract owner?

    Both must retain

  • Does the contractor hold a DMTT tax card?

    Government retention exempt under 2026/27 rules

  • Final payment at least 5% of contract value?

    Required

  • Are you a government contractor?

    Budget rules on retention and clearance apply

What we file

  • Retain 5% from each payment

    Example: payment KWD 40,000 x 5% = KWD 2,000 retained

  • File tax retention return with contracts

  • Release on clearance certificate

What you get

  • Retention register

  • Clearance certificate (for contractors)

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 Source
  • Income Tax Law Executive Bylaws: tax retention return: Contract owners file a tax retention return with copies of contracts; non compliance can lead to disallowance of the related cost Source
  • 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 Source
  • Kuwait Income Tax Law: no withholding tax: Kuwait law imposes no withholding tax; dividends from listed Kuwaiti companies have been exempt since 10 November 2015 Source

Questions people ask

Contact us to book

Online payment in KWD is not open yet. Send us a message and an adviser for Kuwait confirms the scope and the fee before any work starts.

Contact us to book

Sources