GTL Summary:

Ministerial Decision No. 55 of 2025 implements Kuwait's DMTT framework under Decree-Law No. 157 of 2024. Article 32 establishes the rules for allocating the Financial Accounting Net Income or Loss (FANIL) of a Flow-through Entity. It mandates a clear hierarchy, first allocating income to any Permanent Establishment (PE) as per Article 31. Any remaining FANIL is then allocated to Constituent Entity-owners if the entity is tax-transparent, or to the entity itself if it is an Ultimate Parent Entity or Reverse Hybrid Entity.

Document Type: ERS - Executive Regulations
Law: QDMTT Law (Decree-Law no. 157 of 2024)
Decision Number: executive-regulations-55-article-32
Year: 2025
Country: 🇰🇼 Kuwait
Official Name: Article 32 - Allocation of Income or Loss from a Flow-through Entity
Last updated at: 2026-02-23 12:13:40 UTC

CHAPTER 3 - GLOBE INCOME OR LOSS

Article 32 - Allocation of Income or Loss from a Flow-through Entity

The FANIL of a CE that is considered a Flow-Through Entity shall be allocated as follows:

  1. If the Flow-Through Entity operates wholly or partially through a PE, the FANIL of that Entity must be allocated to that PE in accordance with Article 31 of these ERs.

  2. If the Flow-Through Entity is a Tax-Transparent Entity and is not a UPE, any remaining FANIL after applying clause (1) of this paragraph must be allocated to the CE-owners according to their Ownership Interests.

  3. If the Flow-Through Entity is a Tax-Transparent Entity and is a UPE or Reverse Hybrid Entity, any remaining FANIL after applying clause (1) of this paragraph must be allocated to that Entity.

This shall be done separately for each Ownership Interest in the Flow-through Entity.

The FANIL of the Flow-through Entity shall be reduced before the allocation mentioned in the first paragraph of this Article by the amount allocable to owners of the Entity who are not members of the Group Entities and who hold Ownership Interests in the Flow-through Entity directly or indirectly through a Tax Transparent Structure. The following are excluded from the application of this paragraph:

    1. The UPE that is the Flow-through Entity; or

    2. Any Flow-through Entity owned directly by a UPE that is a Flow-Through Entity or indirectly through a Tax Transparent Structure.

The FANIL of the Flow-through Entity shall be reduced by the amount allocated to another CE.

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