GTL Summary:

Ministerial Decision No. 55 of 2025 operationalises Kuwait's DMTT framework under Decree-Law No. 157 of 2024. Article 5 specifies the categories of Excluded Entities exempt from the Top-up Tax, aligning with OECD Pillar Two standards. These include Government Entities, Non-Profit Organizations, International Organizations, Pension Funds, and specific Investment or Real Estate Funds that are Ultimate Parent Entities (UPEs). The article provides detailed qualification criteria, including ownership thresholds (e.g., 95% or 85%) for subsidiary entities, and sets forth strict definitions for 'Governmental Entity' and 'Non-Profit Organization'.

Document Type: ERS - Executive Regulations
Law: QDMTT Law (Decree-Law no. 157 of 2024)
Decision Number: executive-regulations-55-article-5
Year: 2025
Country: 🇰🇼 Kuwait
Official Name: Article 5 - Excluded Entities from Tax (Top-up Tax)
Last updated at: 2026-02-23 12:13:40 UTC

CHAPTER 2 - TAXABLE AND EXCLUDED ENTITIES

Article 5 - Excluded Entities from Tax (Top-up Tax)

The following Entities, whether Kuwaiti or non-Kuwaiti, shall be considered excluded from taxation:

  1. Government Entities.

  2. Non-Profit Organizations.

  3. International Organizations.

  4. Pension Funds.

  5. Investment Fund that is an UPE.

  6. Real Estate Investment Vehicle that is an UPE.

The following Entities are also considered excluded Entities, provided they meet the following conditions:

  1. Any Entity, where at least 95% of the value of the Entity is owned (directly or through a chain of Excluded Entities) by one or more Excluded Entities referred to in the first paragraph of this Article (other than a Pension Services Entity) and where that Entity meets one of the following two conditions:

    1. Operates exclusively or almost exclusively to hold assets or invest funds for the benefit of the Excluded Entity or Entities.

    2. Only carries out activities that are ancillary to those carried out by the Excluded Entity or Entities. Ancillary activities refer to activities that are preparatory or auxiliary in nature to the main activities conducted by the Excluded Entities, and these activities are considered ancillary if they are necessary to support or enhance the performance of the core operations of those Entities.

  2. Any Entity, where at least 85% of the value of the Entity is owned (directly or through a chain of Excluded Entities), by one or more Excluded Entities referred to in the first paragraph of this Article (other than a Pension Services Entity) provided that substantially all of the Entity’s income is Excluded Dividends or Excluded Equity Gain or Loss that is excluded from the computation of GloBE Income or Loss in accordance with Article 10 of these ERs.

A DCE may elect to treat any of the Excluded Entities as a taxable Entity, and this election will be effective for five consecutive Tax Periods.

A Governmental Entity means an Entity that meets all the following criteria:

  1. It is part of the government or fully owned by the government, regardless of its legal form, including any political subdivisions or local authorities affiliated with it.

  2. Its main purpose is one of the following:

    1. Fulfilling a government function;

    2. Managing or investing the government’s or the State’s assets through the making and holding of investments, asset management, and related investment activities for the government’s or the State’s assets, provided that it does not conduct any trade or business Activities;

    3. Being accountable to the government for its general performance and providing annual reports to the government.

  3. Upon liquidation or dissolution, its assets shall revert to the government, and net gains are distributed only to the government when distributed.

The term “government” in this definition means the State government or the government of any other jurisdiction.

Non-Profit Organization means an Entity that meets all the following criteria:

  1. It is established and operates in the jurisdiction where it is resident, and works exclusively to achieve religious, charitable, scientific, artistic, cultural, sporting, educational, or other similar non-profit purposes.

    This also includes professional organizations, business associations, chambers of commerce, labor organizations, agricultural or horticultural institutions, civic league associations, or organizations managed solely to promote social welfare.

  2. The income generated from the activities referred to in clause (1) is exempt from income tax under the laws applicable in the jurisdiction where the Entity is resident.

  3. The Entity has no shareholders or members who have proprietary or beneficial interests in its income or assets.

  4. The Entity’s income or assets may not be distributed or exploited for the benefit of any individuals or non-charitable Entities, subject to the following exceptions:

    1. Distribution for the purpose of carrying out the non-profit activities for which the Entity was established;

    2. Reasonable fees for services provided to the Entity or for the use of property or capital;

    3. Payment representing the fair market value for any property purchased by the Entity.

  5. Upon liquidation or dissolution of the Entity, all assets must be distributed to a Non-Profit Organization or revert to the government or any Governmental Entity in the state or jurisdiction where the Entity is resident, or to any political subdivision of that government.

    The Entity is not considered a Non-Profit Organization if it carries out trade or business activities not directly related to the purposes for which it was established.

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