Tax Retention Advisory (KWT QAT)

Tax Retention Advisory (KWT QAT)

Tax retention is a prominent feature of the tax system in Kuwait and Qatar, where any other Withholding tax is not applicable. In Kuwait, all businesses, both public and private, must retain 5% of the transaction or contractual value payable to any incorporated body. This amount is released when the recipient produces a tax clearance certificate (TCC) from the Ministry of Finance. In Qatar, it holds for payments from government or other public bodies for specific projects made to a temporary branch of non-resident companies undertaking the projects. A prescribed percentage of the contract value or the final payment amount, whichever is higher, must be retained. This is released upon clearance from the General Tax Authority. In effect, resident companies and permanent branches are not subject to this system as they can secure release with their tax card.

At MBG Corporate Services, our experts guide you through the process with:

  • Advice on the Kuwaiti and Qatari tax retention regulations
    • Implications of retention under country ITL and its interplay with the applicable Double Tax Avoidance Agreements
    • Advice on the release of the 5% tax retention by presenting the tax clearance certificate (TCC) along with all requirements to be met
    • Advice and assistance on ITR and other compliance requirements, as applicable.
    • Permanent establishment (PE) implications under the country ITL
  • Advice from a Double Tax Avoidance Agreements (DTAA) perspective
    • Implications on PE and fee for technical services (FTS) under the DTAA
    • Implications on tax rates, compliance etc. related to the retention
    • Dos and Don’ts for PE exposure avoidance
    • Analysis of Beneficial and other tax provisions under DTAAs and their interplay with local country ITL
    • Study on lower tax rates under DTAAs wherever applicable, including possible exemptions and exclusions

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