The income of taxable incorporated body shall be determined on the basis of gross income from operations of all types after deduction of allowed expenses and costs.

The allowed expenses and costs according to the following conditions :

1. As necessary for realization of business-related income.

2. As true and supported with documents.

3. As related to the taxable period.

Expenses and costs include but not limited to the following :

1. Raw materials, consumables and services necessary for the objectives of business.

2. Paid salaries, wages and service indemnity and the like.

3. Depreciation of assets used in business according to the rates stated in Article 4 of this Bylaw.

4. Donations or gifts to the government authorities in the State of Kuwait.

5. Donations, gifts and subsidies paid to Kuwaiti private licensed bodies in the State of Kuwait such as charity and social authorities and societies, provided that deduction shall not exceed 2.5% of the net income of incorporated authority before the allowance of such deduction.

6. Expenses of the head office according to the rates stated in Article 5 of this Bylaw.

The gross income and allowed expenses and costs shall be determined according to the international accounting standards applicable in the State of Kuwait in accordance with the provisions of Decree and this Bylaw.