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Executive Rule No. 47 outlines the tax treatment for an Incorporated Body subject to treaties for the avoidance of double taxation. It establishes controls for approving exempted revenue, requiring its inclusion with related costs in the tax declaration, supported by all necessary documents. The Rule specifies expenses disallowed against such revenues, including direct costs, and portions of agent's commission, head office expenses, indirect administrative expenses, and contract insurance. It also stipulates that special and exceptional cases must be treated separately after consulting with the Tax Department.

Executive Rule No. 47 Concerning tax treatment for the Incorporated Body subject to treaties for the avoidance of double taxation

Article No. 3 , 8 of the Executive Regulations

First: Control for the approval of exempted revenue under the treaties for the avoidance of double taxation:

The exempted revenue and related cost shall be included with the attachments of the tax declaration submitted by the Incorporated Body.
Submission of all the documents in support of the exempted revenue and its related costs.

Second: Expenses disallowed against the exempted revenues:

The cost of exempted revenue (direct expenditures represented by all costs incurred directly by the Incorporated Body in order to earn the revenue).
The portion of agent's commission related to exempted revenues.
The portion of head office expenses related to exempted revenues.
The portion of indirect expenses (general and administrative expenses) in the State of Kuwait, and within a percentage of 20% related to exempted revenue.
The portion of insurance on the entire contract that relates to exempted revenue.

Third: Special and exceptional cases relating to the tax treatment of the incorporated body subject to treaties for the avoidance of double taxation shall be treated separately after consulting the Tax Department in this regard.