• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 5/7/2014

Kuwait - Deductibility of expenses for tax purposes, other guidance 

May 7: The Kuwait tax authority issued guidance on tax administrative matters, as well as guidance concerning the deductibility of expenses for tax purposes.

Among the guidance provided by the tax authorities are the following rules:

  • Pre-operating expenses must now be claimed in full, in the year incurred (instead of amortized over the contract’s life) and be fully supported by appropriate documentation.
  • Any sub-contracted work requires written approval from the main contract owner. Sub-contracting costs that exceed related revenue are not deductible for tax purposes.
  • Insurance costs incurred outside Kuwait are no longer deductible. Insurance costs that form part of the costs of imported goods are treated as material costs.
  • The tax authority now applies fixed percentages (instead of ranges) for imputing profits on income from goods imported to Kuwait and from design and consultancy services rendered outside Kuwait.

Read a May 2014 report prepared by KPMG: Executive rules updated

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