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Kuwait-Saudi tax law takes effect, prevents double taxation

Kuwait  - The Government of Kuwait has officially issued Decree-Law No. 80 of 2025, approving a significant bilateral agreement with the Kingdom of Saudi Arabia aimed at avoiding double taxation on income and curbing tax evasion and avoidance.

The agreement, originally signed in Riyadh on December 4, 2024, represents a key step in strengthening economic and financial cooperation between the two neighboring Gulf states.

The decree, which took effect upon its publication in the Official Gazette on Sunday, provides a comprehensive framework to ensure that individuals and entities operating across both countries are not unfairly taxed twice on the same income, while enhancing transparency and compliance with international tax standards.

Article One of the agreement outlines the individuals and entities to whom the provisions apply. It includes specific measures for income generated through entities or arrangements, ensuring that income is taxed appropriately according to its source and nature.

Article Two details the types of taxes covered under the agreement. It is not limited to existing tax regimes but extends to any future taxes imposed by either government after the agreement’s signing date, providing flexibility for evolving fiscal policies.

Articles 6 through 20 cover a wide range of income sources, detailing the tax treatment for:

• Income from immovable propertyn
• Business profitsn
• Maritime, air, and land transportationn
• Joint venturesn
• Dividends and interest on debt claimsn
• Royalties and technical service incomen
• Capital gainsn
• Independent and dependent personal servicesn
• Fees for board members, artists, and athletesn
• Pensions and remuneration from government servicen

These articles establish clear rules on how income derived from cross-border activities will be taxed, thereby reducing the risk of legal uncertainties or double tax burdens for taxpayers in both nations.

Articles 21 and 22 of the agreement provide exemptions for specific categories. Teachers, researchers, students, and trainees from either country will not be subject to income taxes under this agreement, supporting educational and cultural exchanges and professional development.

The issuance of this decree reflects Kuwait's continued commitment to aligning with international tax practices and fostering regional cooperation. By formalizing this agreement with Saudi Arabia, both countries aim to create a more predictable and transparent tax environment that benefits individuals, businesses, and investors operating across their borders.