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Document Type: ER - Executive Rules & Instructions
Law: KIT (Law No. 2 of 2008 amending Decree No. 3 of 1955)
Decision Number: 44
Year: 2013
Country: 🇰đŸ‡ŧ Kuwait
Official Name: Executive Rule No. 44 Concerning Royalties

Ministry of Finance - Tax Department - 2013 [Executive Rules & Instructions]

Executive Rules and Instructions of Kuwait Income Tax Decree No. 3 of 1955 as amended by law No. 2 of 2008

Executive Rule No. 44 Concerning Royalties

Article No. 2 and 3 of the Executive Regulations

These are the amounts collected from the sale, lease or grant of royalties for use or the utilize of any trade mark, design, patent, copyrights or publications or other moral rights or rights related to the intellectual rights in consideration of using any right of publishing literary, artistic or scientific rights in any form.

First: Tax treatment for various activities

  1. In case of submitting a tax declaration:

    1. The head office expenses shall be accepted in the percentage of 1.5% of the concession rights as well as the local auditing fees related to the tax declaration submission. While the residual expenses shall be excluded except in case there is any text in the contract stipulating that the incorporated body shall bear particular costs as (training, consultancy, inspection). These will be documentary inspected and approved after ensuring the necessity of such cost for that activity.

    2. For hotel activities, a portion of 15% shall be accepted as expenditures of concession rights in return to all the expenditures including the head office expenses

  2. In case of not submitting a tax declaration:

    The concession rights of the Incorporated Body shall be calculated in full according to the contract's provisions.

Second: concession rights for the Incorporated Bodies that are subject to the avoidance of double taxation agreement:

The tax rates shall be applied as per the agreements provided that the rate does not exceed the rate stipulated in the income tax Decree and amendments thereto.

Third: the concession rights in Incorporated Bodies joint with Kuwaiti companies:

The amount of concession right shall be accepted as expenditures to the company as a whole and be added to the net full profit of the Incorporated Body.

Fourth: Special and exceptional cases related to the concession rights are treated separately after consulting the Tax Department in this regard.