GTL Summary:

Ministerial Decision No. 55 of 2025 implements Kuwait's DMTT framework under Decree-Law No. 157 of 2024. Article 115 provides specific transitional rules for Multinational Enterprise (MNE) Groups regarding tax attributes. It mandates that all Deferred Tax Assets (DTAs) and Deferred Tax Liabilities (DTLs) of Constituent Entities in the State must be taken into account when determining the Effective Tax Rate (ETR). The article specifies valuation at the lower of the minimum tax rate or the applicable domestic rate, outlines exclusions for certain pre-existing Kuwaiti laws, and sets conditions for asset transfers occurring after 30 November 2021.

Document Type: ERS - Executive Regulations
Law: QDMTT Law (Decree-Law no. 157 of 2024)
Decision Number: executive-regulations-55-article-115
Year: 2025
Country: 🇰🇼 Kuwait
Official Name: Article 115 - Tax Attributes During the Transitional Period for the GloBE Rules
Last updated at: 2026-02-23 12:13:40 UTC

CHAPTER 18 - FINAL PROVISIONS

Article 115 - Tax Attributes During the Transitional Period for the GloBE Rules

When determining the ETR in the State during a transitional period and for each subsequent Tax Period, an MNE Group must take into account all DTAs and DTLs disclosed or included in the financial accounts of all CEs in the State during the transitional period. These DTAs and DTLs shall be taken into account at an amount equivalent to the lower of the minimum tax rate or the applicable domestic income tax rate. A DTA recognized at a rate lower than the minimum tax rate may be considered at the minimum tax rate, if the Taxpayer can prove that the DTA is attributable to GloBE loss, considering the following:

  1. The impact of any adjustments resulting from revaluation or changes in accounting recognition related to DTAs shall not be considered.

  2. The amounts related to the following laws shall not be considered as DTAs or DTLs for the purpose of clause (1):

    1. Decree No. 3 of 1955 on Kuwait Income Tax and the amending laws thereof.

    2. Law No. 23 of 1961 on income tax in the “Designated Area.”

    3. Law No. 19 of 2000 on the Supporting and Encouraging National Employment to Work in Non-Governmental Entities, as amended by Law No. 32 of 2003,

    4. Law No. 46 of 2006 regarding Zakat and the contribution of public and closed joint stock companies to the State budget.

DTAs arising from items excluded from the calculation of GloBE income or loss as per Chapter Three of the calculation process mentioned in paragraph 1 of this Article shall be excluded, if such DTAs arise from transactions occurring after 30 November 2021.

If assets are transferred between CEs after 30 November 2021 and before the commencement of the transitional period, the tax basis of the acquired assets (excluding inventory) must be based on the book value of the transferring Entity at the time of the transfer. The DTAs and DTLs falling under the GloBE rules must be determined on this basis, considering the following:

  1. A notional DTA may be created from losses that were not recognized due to changes in accounting recognition, valuation allowance, or failure to meet recognition criteria.

  2. These DTAs and DTLs shall not be subject to the adjustments outlined in clauses (1) to (4) of Paragraph 3 or Paragraph 7 of Article 38 of the ERs, except for the adjustments specified in Paragraph 3 of this Article.

  3. Exception to clause (5) of Paragraph 3 of Article 38 of these ERs: DTAs resulting from a carried-forward tax deduction are recognized at their book value, provided the tax rate used to determine the DTA is lower than the minimum tax rate. Otherwise, the DTA value shall be calculated using the following formula:

    DTA = Minimum Tax Rate × DTA Reflected in Financial StatementsApplicable Domestic Tax Rate

DTAs in the FS means the DTAs recorded or disclosed in the FS related to attributable to a tax credit carry-forward originating in the State.

The applicable domestic Tax Rate means the Tax Rate applicable to the CE in the Tax Period immediately preceding the transitional period.

The following provisions shall apply in case the applicable tax rate changes in a later Tax Period:

  1. The formula must be reapplied to the remaining balance of the tax credit in the FS to determine the adjusted DTA.

  2. Any change in the DTA amount resulting from the reapplication referred to in this Article shall not be treated as a deferred tax expense included in the recalculated covered tax amount for the Tax Period in which the adjustment occurs.

  3. Deferred tax expenses for the Tax Period in which the reapplication of the formula (provided in this Article) occurs, and for subsequent periods, shall be determined with reference to the reversal amount of the DTA after reapplying the formula mentioned in this Article.

The Transition Period referred to in this Article is the Transition Period of the disposing CE, which is the first period in which its low-taxed income becomes subject to tax under the Pillar Two Rules irrespective of when other CEs in the State became subject to the Pillar Two Rules.

The following provisions are applied for determining Tax Basis for acquired assets transferred After 30 November 2021 Between CEs:

  1. The carrying value of the transferred assets may be increased by capitalized expenditures or decreased by depreciation or amortization that arise after the transaction and before the beginning of the Transition Period, in accordance with the accounting standard used in the financial statements used for purposes of determining the Pillar Two Income or Loss.

  2. Exclusion of any increase in depreciation or amortization resulting from recording assets at fair value in the financial accounting of the acquiring Entity from the GloBE income or loss calculation.

  3. If the acquiring CE records the acquired asset at fair value in its financial accounts, it may instead use the book value of that asset as recorded in the financial accounts for all subsequent Tax Periods provided that it would otherwise be entitled to recognize a DTA equal to the minimum tax rate multiplied by the difference between the local tax basis of the asset and the GloBE book value of the asset as determined under this Article.

The following provisions apply in the event of applying the tax to the CEs in the State during the Tax Period that begins on or before the Tax Period in which the Qualified IIR or the Qualified UTPR becomes applicable for the first time to those CEs:

  1. The Tax Period in which the Qualified IIR or the Qualified UTPR takes effect for these CEs shall be considered the new transitional Tax Period, and the tax attributes of these CEs shall be re-evaluated according to the other provisions of this article.

  2. Any excess of carried forward negative deferred tax expense must be eliminated at the beginning of the new transitional Tax Period.

  3. Paragraph seven of Article 38 of these ERs does not apply to any DTL that was considered when calculating the ETR and was not recovered before the new transitional Tax Period; rather, that Article applies to DTLs considered during and after the new transitional Tax Period.

  4. The DTA for the GloBE loss, as per Article 39 of these ERs, which arose before the new transitional Tax Period, must be eliminated. The DCE may make a new election for the GloBE loss in the new transitional Tax Period.

  5. The provisions of this Article apply to transactions occurring after November 30, 2021, and before the start of the new transitional Tax Period.

  6. If the Tax Due becomes payable as a result of applying paragraph three of Article 34 of these ERs concerning a DTA attributable to a tax loss, this DTA shall not be treated as arising from items excluded from the calculation of income or loss under GloBE according to Article 9 of these ERs.

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