Article 3 - Revenue Threshold Test

The “Revenue Threshold” means the annual consolidated revenue of EUR 750 million or more (or its equivalent in Kuwaiti Dinar) as reported in Consolidated Financial Statements of the UPE of the MNE Group, in at least two of the four Tax Periods immediately preceding the tested Tax Period, without prejudice to the provisions of Article 50 of these ERs, which modify the application of the Revenue Threshold in certain cases.

Revenue is determined based on the CFS of the MNE Group, and includes, but is not limited to, the following examples:

1. Revenues arising from the inflow of economic benefits generated from the production or delivery of goods, provision of services, or other ordinary activities, in accordance with the relevant accounting standard, which may allow for the netting of discounts or returns. In all cases, such revenues shall be calculated before deducting the cost of sales and other operating expenses.

2. Net gains from investments, whether realized or unrealized, that are included in the income or loss statement within the CFS, in addition to income or gains separately presented as exceptional or non-recurring items in the CFS. "Net gains from investments" refers to the result of subtracting investment losses from investment gains, provided that the outcome is not less than zero, in cases where investment gains and losses are reported separately in the income statement within the CFS for a given Tax Period.

3. Revenues of an Excluded Entity, if that Entity is part of an MNE Group, for the purpose of applying the Revenue Threshold test only.

Transactions conducted within the MNE Group are excluded from the calculation of the Revenue Threshold.

The share of revenues belonging to minority interest holders cannot be subtracted from the total revenues.

If different types of revenues are reported separately in the income or loss statement within the CFS, such revenues must be aggregated for the purpose of applying the Revenue Threshold test.

If the MNE Group does not prepare CFS, its annual revenue shall be determined by applying the deemed consolidation test, which involves calculating assets, liabilities, income, expenses, and cash flows on an item-by-item basis for all Entities in which the UPE has a Controlling Interest.

If the MNE Group does not have CFS for any of the four previous fiscal periods due to the recent establishment of the Group’s CEs, then the provisions of the DMTT Law shall apply starting from the third Tax Period for which CFS are prepared, provided that the Revenue Threshold is met in the two Tax Periods immediately preceding that period.

If any of the preceding Tax Periods is less than or more than 12 months, the Revenue Threshold shall be recalculated proportionally to determine the threshold for that period using the following formula: