Kuwait - QDMTT Safe Harbour Status Granted to DMTT

As reflected in the OECD Central Record as of 1 May 2026, Kuwait's Domestic Minimum Top-up Tax (DMTT) has been formally recognized as a Qualified Domestic Minimum Top-up Tax (QDMTT) under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).

This development has important implications for Multinational Enterprise (MNE) groups operating in Kuwait, unlocking the QDMTT Safe Harbour and reducing compliance burdens across the globe.

1- Background

Kuwait enacted the Tax Law on Multinational Entity Groups through Decree-Law No. 157 of 2024, aligning domestic legislation with the OECD/G20 Inclusive Framework's Pillar Two global minimum tax initiative. The law primarily targets large MNE groups — those with consolidated group revenues of EUR 750 million or more in at least two of the four preceding fiscal years — ensuring such groups operating in Kuwait are subject to an Effective Tax Rate (ETR) of at least 15%.

The Executive Regulations of the law were subsequently issued by Ministerial Resolution No. 55 of 2025, establishing detailed procedural and compliance requirements — including provisions governing the filing of the DMTT Return and the GloBE Information Return (GIR).

On 1 May 2026, a critical milestone was reached: the OECD/G20 Inclusive Framework formally conferred QDMTT Safe Harbour qualified status on Kuwait's DMTT, effective as of 1 January 2025. This recognition validates that Kuwait's domestic minimum tax meets the international standards required to operate under the GloBE Rules.

2- What Is the QDMTT Safe Harbour and Why Does It Matter? 

Under the GloBE Rules, a QDMTT Safe Harbour allows MNE groups to treat their top-up tax obligation in a given jurisdiction as zero for Globe purposes— provided that the jurisdiction's domestic minimum top-up tax qualifies under the OECD's prescribed criteria and the applicable safe harbor conditions are satisfied.In practical terms, this means that:

• Parent entities applying the Income Inclusion Rule (IIR) should generally compute zero additional top-up tax attributable to Kuwaiti Constituent Entities (CEs), provided the QDMTT Safe Harbour conditions are satisfied.
• Jurisdictions operating an Undertaxed Profits Rule (UTPR) will similarly treat any residual top-up tax linked to Kuwait as nil, provided the relevant conditions are met.
• The QDMTT Safe Harbour applies retroactively from 1 January 2025 — the date Kuwait's DMTT became effective.

Where the QDMTT Safe Harbour conditions are satisfied, this significant development should reduce the risk of additional foreign top-up tax charges on Kuwait-sourced profits.

3- Implications for MNE Groups Operating in Kuwait

3.1 - IIR / UTPR Top-Up Tax Deemed Zero
MNE groups whose parent jurisdictions have implemented the IIR or UTPR should generally be able to treat any incremental top-up tax attributable to Kuwait as nil — subject to the QDMTT Safe Harbour conditions being fully satisfied. This should significantly reduce the risk of additional foreign tax charges on Kuwait profits and provide a material tax planning advantage for in-scope MNE groups operating in Kuwait.

3.2 - Simplified Compliance
MNE groups may avoid a full separate IIR/UTPR calculations with respect to their Kuwait-based entities. The reduction in computational demands at the parent company level or other implementing jurisdictions translates directly into streamlined operations, reduced reporting costs, and enhanced operational efficiency for both the group and its Kuwait subsidiaries.

3.3-  Certainty in Tax Provisioning
The formalization of Kuwait's DMTT a QDMTT, and its eligibility for QDMTT Safe Harbour treatment provides MNE groups with greater certainty when calculating quarterly and annual tax provisions. The predictability and stability afforded by this recognition supports robust financial planning and reduces the likelihood of material adjustments arising from foreign IIR or UTPR computations in respect of Kuwait profits, provided the relevant conditions are satisfied.

3.4 - Retroactive Application from 1 January 2025
It is important to note that Safe Harbour status is recognized as of 1 January 2025. MNE groups that may have provisioned for IIR or UTPR top-up tax on Kuwait profits in respect of fiscal year 2025 should revisit those provisions in light of this development.

4- Conditions for the Safe Harbour to Apply

The QDMTT Safe Harbour is not automatic. To benefit from it, MNE groups must ensure the following:

• The group's Kuwaiti Constituent Entities are within the scope of Kuwait's DMTT.
• The DMTT has been correctly calculated and reported in compliance with Decree-Law No. 157/2024 and Ministerial Resolution No. 55/2025.
• The GloBE Information Return (GIR) has been filed, or appropriate local filing obligations have been met, within the prescribed deadlines.
• The group maintains sufficient documentation to support reliance on the QDMTT Safe Harbour in Kuwait and in any relevant parent or UTPR jurisdictions.
  

5- Recommended Actions

In light of the above, we recommend MNE groups take the following steps:

• Review existing DMTT compliance positions to confirm Safe Harbour eligibility for FY2025 and beyond.
• Reassess any IIR/UTPR top-up tax provisions booked at the parent company level with respect to Kuwait for FY2025.
• Ensure GloBE Information Return (GIR) filing obligations are met in Kuwait and at the parent company level.
• Coordinate with group tax teams and local advisors to align Kuwait DMTT computations with the Safe Harbour requirements

How We Can Help

Deloitte's Kuwait Tax & Legal team has been at the forefront of advising MNE groups on DMTT compliance since the law's enactment. We offer comprehensive support across the full compliance and advisory lifecycle, including:

• DMTT scoping and applicability assessments
• GloBE and QDMTT Safe Harbour eligibility reviews
• DMTT Return and GIR preparation and filing
• Pillar Two modelling and ETR analysis for Kuwait operations
• Coordination with group tax functions on IIR/UTPR positions
• Assistance with historical FY2025 provision reviews and adjustments