GTL Summary:

Ministerial Decision No. 55 of 2025, implementing Kuwait's DMTT framework under Decree-Law No. 157 of 2024, details the treatment of asset and liability transfers. Article 52 mandates that gains or losses from standard disposals are included in the GloBE Income calculation. However, for a 'GloBE Reorganization', such gains are excluded, with the acquirer using the disposer's carrying value. The article provides specific rules for any 'Non-Qualifying Gain or Loss' within such reorganizations and offers an election for entities to adjust assets to fair value, spreading the gain over five years.

Document Type: ERS - Executive Regulations
Law: QDMTT Law (Decree-Law no. 157 of 2024)
Decision Number: executive-regulations-55-article-52
Year: 2025
Country: 🇰🇼 Kuwait
Official Name: Article 52 - Transfer of Assets and Liabilities
Last updated at: 2026-02-23 12:13:40 UTC

CHAPTER 6 - CORPORATE RESTRUCTURINGS AND HOLDING STRUCTURES

Article 52 - Transfer of Assets and Liabilities

The disposal or acquisition of assets and liabilities shall be performed according to the following provisions:

  1. The disposing CE must include any gains or losses resulting from the disposal when calculating the GloBE Income or Loss.

  2. The acquiring CE must determine its GloBE Income or Loss based on the carrying value of the acquired assets and liabilities, as determined according to the accounting standard used for calculating the GloBE Income or Loss of the CE.

The provisions of the first paragraph of this Article do not apply if the disposal or acquisition of assets and liabilities forms part of a GloBE Reorganization, in which case the following must be adhered to:

  1. The disposing CE must exclude any gains or losses from the disposal from the calculation of GloBE Income or Loss of the CE.

  2. The acquiring CE must determine its GloBE income or loss after the acquisition based on the carrying value of the disposing Entity's assets and liabilities acquired at disposal.

If the disposal or acquisition of assets and liabilities forms part of a GloBE Reorganization, and the disposing CE has recognized a non-qualifying gain or loss, the provisions of the first and second paragraphs of this Article shall not apply. In this case, the following must be adhered to:

  1. The disposing CE shall include the gain or loss resulting from the disposal for the purpose of calculating the GloBE income or loss of the CE, up to the amount of the non-qualifying gain or loss.

  2. The acquiring CE must determine its GloBE income or loss after the acquisition based on the Carrying Value of the disposing Entity’s assets and liabilities acquired at disposal, which must be adjusted in accordance with local tax legislation to account for the non-qualifying gain or loss.

Based on the election of the DCE, a CE that is a member of an MNE group, that is permitted or required to adjust the tax base of assets and liabilities to fair value for tax purposes in the jurisdiction where the liability arises must adhere to the following:

  1. The CE must include the amount of the gain or loss related to each asset and liability for the purpose of calculating GloBE Income or Loss, and this amount shall equal all the following:

    1. The difference between the carrying value of the asset or liability for financial accounting purposes immediately before the event giving rise to the tax adjustment (the "Triggering Event”) and the fair value of that asset or liability immediately after the Triggering Event.

    2. Any decrease or increase resulting from the non-qualifying gain or loss, if any, arising from that Triggering Event.

  2. The CE must use the fair value of the asset or liability for financial accounting purposes immediately after the Triggering Event to determine the GloBE Income or Loss in the Tax Periods ending after the Triggering Event.

  3. The CE must include the aggregate net amounts described in clause (1) of this paragraph to determine the GloBE income or loss of the CE according to one of the following two options:

    1. Include the aggregate net amount in the Tax Period in which the Triggering Event occurred.

    2. Include the aggregate net amount spread over five consecutive Tax Periods, starting from the Tax Period in which the Triggering Event occurred and continuing over the next four Tax Periods, unless the CE leaves the MNE Group during any of those Tax Periods, in which case the remaining amount must be included in full in the Tax Period during which the CE leaves the MNE group.

GloBE Reorganization means a transaction involving the transfer or transformation of assets and liabilities, including mergers, demergers, liquidations, or any similar transaction, in which all of the following occur:

  1. The consideration, wholly or partly, consists of equity interests issued by the acquiring CE or by an Entity related to the acquiring CE, or in the case of a liquidation, equity interests in the target, or if no consideration is provided, when the issuance of equity interests has no economic significance.

  2. The disposing CE does not recognize, wholly or partly, a gain or loss on those assets for tax purposes.

  3. Tax laws in the Jurisdiction where the acquiring CE is located require the taxable income after the disposal or acquisition to be calculated by applying the tax treatment of assets to the disposing CE, with necessary adjustments for any non-qualifying gains or losses arising from the disposal or acquisition.

Non-Qualifying Gain or Loss is defined as the lesser amount of either the gain or loss recognized by the disposing CE relating to the GloBE Reorganization that is taxable in the jurisdiction of the disposing CE, or the accounting gain or loss arising from the GloBE Reorganization.

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