Tax Residency in Kuwait
1. Criteria for Determining Tax Residency in Kuwait
According to Article 2 of Kuwait's Income Tax Law, an individual is considered a tax resident if they meet any of the following criteria:
- Physical presence in Kuwait for more than 183 days in a calendar year.
- Having a permanent home in Kuwait.
- Carrying out a trade or profession in Kuwait.
- Being employed by the Kuwaiti government or a public institution.
For companies, tax residency is determined based on their place of incorporation or management and control. A company is considered a tax resident if it is incorporated in Kuwait or if its management and control is exercised in Kuwait.
2. Impact of International Tax Treaties on Tax Residency
Kuwait has entered into several double taxation agreements (DTAs) with other countries. These DTAs may modify or provide exceptions to the standard criteria for tax residency as defined in domestic law.
For example, the DTA between Kuwait and the United Kingdom provides that an individual is considered a resident of Kuwait if they have a permanent home in Kuwait or if their habitual abode is in Kuwait. The DTA also includes a tie-breaker rule for individuals who are considered residents of both Kuwait and the United Kingdom under each country's domestic law.
The purpose of these treaty-specific modifications is to prevent double taxation and to provide clarity on the determination of tax residency in cases involving cross-border activities.
If you're interested in exploring tax residency in Kuwait or need assistance with your international tax planning, Heavnn can help. Our team of experts can provide you with personalized advice and help you navigate the complexities of Kuwait's tax laws.
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