GTL Summary:

Ministerial Decision No. 55 of 2025, implementing Kuwait's DMTT framework under Decree-Law No. 157 of 2024, details specific tax neutrality rules in Article 59. It outlines the optional 'Equity Investment Inclusion Election', requiring adjustments to GloBE income and covered taxes for associated gains or losses. The Article provides distinct treatment for 'Qualified Flow-through Tax Benefits' linked to Qualified Ownership Interests, specifying how such benefits impact the owner's Adjusted Covered Taxes. It sets rules for when an owner's investment is reduced to zero and introduces an irrevocable election for a proportional amortization method.

Document Type: ERS - Executive Regulations
Law: QDMTT Law (Decree-Law no. 157 of 2024)
Decision Number: executive-regulations-55-article-59
Year: 2025
Country: 🇰🇼 Kuwait
Official Name: Article 59 - Equity Investment Inclusion Election and Qualified Flow-through Tax Benefits
Last updated at: 2026-02-23 12:13:40 UTC

CHAPTER 7 - TAX NEUTRALITY AND DISTRIBUTION REGIMES

Article 59 - Equity Investment Inclusion Election and Qualified Flow-through Tax Benefits

Accounting gains, profits, or losses included in GloBE income or loss must be adjusted in accordance with the provisions of Article 13 of these ERs, except as provided in paragraph (3) of its first chapter.

If the election to include investments in equity is made, all current and deferred tax expenses or benefits arising from the accounting gains, profits, or losses included in GloBE income or loss under the first paragraph of this Article must be included in the adjusted covered taxes account, taking into account the relevant provisions of these ERs.

The owner subject to the Equity Investment Inclusion Election may not apply the two previous paragraphs to the Qualified Flow-Through Tax Benefits of Qualified Ownership Interests, and the following provisions shall apply in this case:

  1. Qualified Flow-through Tax Benefits will be allowed as a positive amount in the Adjusted Covered Taxes of the direct owner of a Qualified Ownership Interest or an indirect owner of such an interest through a chain of Tax Transparent Entities that are not Constituent Entities of the MNE Group to the extent the Qualified Flow-through Tax Benefit was treated for financial accounting purposes as reducing tax expense.

  2. The amount of a Qualified Flow-through Tax Benefit is equal to the amount of the tax credit or tax-deductible loss that have flowed through to the owner through a Qualified Ownership Interest to the extent that it reduces the owner's investment in the Qualified Ownership Interest by any of the following:

    1. The amount of such tax credit or tax loss.

    2. The amount of any distributions (including return of capital) to the owner.

    3. The amount resulting from the sale of the entire or part of the Qualified Ownership Interest.

  3. For the purposes of clause (2) of this paragraph, the deductible tax loss is equal to the amount of the tax loss multiplied by the statutory tax rate applied to the owner.

  4. The application of this paragraph's provisions shall not result in the owner's investment becoming less than zero, and no amount shall be treated as a reduction of the investment to the extent that it reduces the investment below zero.

  5. If the owner's investment is reduced to zero due to receiving tax credits or deductible tax losses through a Qualified Ownership Interest, or after receiving distributions (including return of capital) or proceeds from the sale of all or part of the Qualified Ownership Interest, the following provisions shall apply:

    1. Any subsequent amount of tax credits or deductible tax losses obtained by the owner through a Qualified Ownership Interest shall be treated as a negative amount in the adjusted covered taxes of the owner.

    2. Any subsequent amount of distributions (including return of capital) or proceeds from the sale of all or part of the Qualified Ownership Interest or Qualified Refundable Tax Credits obtained through the Qualified Ownership Interests shall be treated as a negative amount in the adjusted covered taxes of the owner to the extent that it equals the amount of any Qualified Flow-Through Tax Benefits through the Qualified Ownership Interest that was treated as positive amount in the owner's adjusted covered taxes.

When using the proportional amortization method to calculate the Qualified Ownership Interest for financial accounting purposes, such method shall apply for determining the amount of investment that is recovered in each period. Owners who do not use this method may make an irrevocable election to apply it, provided that the election is made in the first Tax Period in which they acquire the Qualified Ownership Interest or become subject to GloBE rules.

When applying this method, any tax credit or tax loss that flows through, distributions (including return of capital), or proceeds from the sale of all or part of the Qualified Ownership Interest shall be treated as a reduction of the investment in proportion to the expected benefit rate.

The expected tax benefits ratio is the ratio of the tax credits and tax losses that flowed through or are received in the Tax Period to the total of such items that are expected to flow through or are received in respect of the Qualified Ownership Interest over the term of the investment.

Tax credits or tax losses that flow or distributions (including return of capital) or sale proceeds received relating to the Qualified Ownership Interest that exceed the reduction in investment shall not be included as a positive amount in the owner's Adjusted Covered Taxes.

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