Article 10 of Kuwait's Decree-Law No. 157 of 2024 establishes the framework for the Substance-Based Income Exclusion (SBIE). It allows a taxpayer to reduce their GloBE income by an amount reflecting their substantial economic activities within Kuwait. This exclusion is calculated as the sum of two components: a carve-out for payroll costs, set between 5% and 9.6% of total salary expenses, and a carve-out for tangible assets, set between 5% and 7.6% of their average book value. The article mandates that detailed controls and conditions for applying this provision will be specified in the executive regulations.
Chapter 3 - Tax Imposition and Entitlement
Article 10 - Income Excluded Based on the Significance of the Activity
The income excluded based on the significance of the activity for the taxpayer for the tax period is determined by the sum of the following:
The total salary costs incurred, with a maximum of (9.6%) and a minimum of (5%) of salary costs.
The average value of tangible assets at the beginning and end of the tax period, with a maximum of (7.6%) and a minimum of (5%) of the book value of those assets.
The executive regulations specify controls and conditions related to the application of the provisions of this Article.
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