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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: 48
Year: 2013
Country: 🇰đŸ‡ŧ Kuwait
Official Name: Executive Rule No. 48 Concerning treatment for exempted Incorporated Body

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. 48 Concerning tax treatment of the exempted incorporated body

Article No. 8 and 37 of the Executive Regulations

First: The exempted Incorporated Body shall submit a tax declaration with its attachments and commit to all the procedures of the inspection and assessment to determine the exempted tax amount like other Incorporated Bodies.

Second: Tax treatment of the exempted Incorporated Body

  1. Revenues:

    1. Study the exemption decision to determine the exempted activity and its related revenues.

    2. Other various revenues not included in the exemption Decree are accounted for.

  2. Expenses:

    All expenses necessary for generating exempted revenues are disallowed. These include:

    1. Cost of exempted revenues (direct expenses represented by all costs incurred directly by the Incorporated Body to obtain revenues);

    2. The portion of exempted revenues related to the agent commission's;

    3. The portion of exempted revenues related to expenses of the head office;

    4. The portion of exempted revenues related to indirect expenses (general and administrative expenses) in the State of Kuwait with percentage of 20%;

    5. The portion of exempted revenues related to insurance for the whole contract;

Third: If the Incorporated Body's account for one of the exempted years ends with a loss, it will not be carried forward to the period subsequent to expiry of the exemption period.

Fourth: If the activity ceases due to force majeure or an unpredictable sudden event, this shall not lead to the extension of the years designated for tax exemption by another period equivalent to the period in which the activity was ceased, as long as the exemption period has already started.

Fifth: Special and exceptional cases related to tax treatment of exempted incorporated bodies are treated separately after consulting the Tax Department in this regard.