GTL Summary:

Ministerial Decision No. 55 of 2025, implementing Kuwait's DMTT framework, provides a specific election under Article 25. This article allows a Domestic Constituent Entity to spread a net capital gain from disposing of tangible assets over a five-year look-back period, which includes the current and four preceding tax periods. This election triggers a recalculation of the Effective Tax Rate (ETR) and any Top-Up Tax for all affected prior periods. The gain is first offset against prior period net asset losses, with any remaining amount allocated equally across the five tax periods.

Document Type: ERS - Executive Regulations
Law: QDMTT Law (Decree-Law no. 157 of 2024)
Decision Number: executive-regulations-55-article-25
Year: 2025
Country: 🇰🇼 Kuwait
Official Name: Article 25 - Election to Spread Capital Gains Over Five-tax Periods
Last updated at: 2026-02-23 12:13:40 UTC

CHAPTER 3 - GLOBE INCOME OR LOSS

Article 25 - Election to Spread Capital Gains Over Five-tax Periods

If a net capital gain results from the disposal of tangible assets in the State during a Tax Period, the DCE may elect, for a Tax Period in the State, to adjust the GloBE income or loss for each prior Tax Period within the look-back period, in accordance with clauses (2) and (3) of paragraph 4 of this Article, with any remaining Adjusted Asset Gains distributed over the look-back period as described in clause (4) of the same paragraph.

For the purposes of this Article, the term "look-back period" means the Tax Period in which the election is made, plus the four preceding Tax Periods.

Upon making the election under this Article, the ETR and the Top-Up Tax, if any, for the prior Tax Periods must be recalculated according to paragraph one of Article 47 of these ERs. When making this election under this Article, the following shall be considered:

  1. Covered taxes with respect to any Net Asset Gains or Net Asset Losses in the election Tax Period shall be excluded when calculating the Adjusted Covered Taxes.

  2. The Aggregate Asset Gains in the election Tax Period shall be carried back to the earliest loss period and set off ratably against any Net Asset Losses of any CE located in the State and belonging to the same MNE Group.

  3. If the Adjusted Asset Gains in any particular loss period exceed the total Net Asset Losses of all CEs located in the State, the Adjusted Asset Gains (i.e., the excess gains) shall be carried forward to the next loss period (if any) and applied ratably against any Net Asset Losses of any CE located in the State.

  4. Any remaining Adjusted Asset Gains after applying the provisions of clauses (2) and (3) of this paragraph shall be allocated equally to each Tax Period in the look-back period.

The allocated Asset Gains for each relevant Tax Period must be included in calculating the GloBE income or loss for the CE located in the State for that Tax Period, according to the following formula:

Allocated Asset Gain for the Year X Net Asset Gain of the specified Constituent Entity in the election periodNet Asset Gains of the specified Constituent Entities in the election period

Specified Constituent Entity is defined as the CE that has Net Asset Gains during the tax election period and was located in the State during the relevant Tax Period. If there is no specified CE during the relevant Tax Period, the Adjusted Asset Gains allocated for that Tax Period shall be distributed equally among all CEs located in the State during that Tax Period.

Net Asset Gains is defined as the net gain resulting from the disposal of Local Tangible Assets held by a CE located in the State to which the election applies, excluding gains or losses on transfers of assets to another member of the Group.

Net Asset Loss is defined as the net loss resulting from the disposal of Local Tangible Assets held by that CE during that Tax Period, excluding gains or losses on transfers of assets to another member of the Group. The amount of Net Asset Loss shall be reduced by the amount of Net Asset Gains or Adjusted Asset Gains that are offset against this loss as a result of a previous election made.

Tax Loss Period is defined as a Tax Period within the look-back period where there is a Net Asset Loss for a CE in that state, and the total amount of Net Asset Loss for all CEs exceeds the total amount of their Net Asset Gains.

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