מחירי העברה: כוויית- יולי 2014

KUWAIT- KEY CHANGES RELATING TO TRANSFER PRICING IMPACTING FOREIGN COMPANIES OPERATING IN KUWAIT

The Kuwait Income Tax Department recently issued a revised set of Executive Rules and Regulations (the Executive Rules) which apply for tax periods ending on 31 December 2013 and thereafter. The revised Executive Rules include the following changes relating to transfer pricing which will affect foreign companies operating in Kuwait.

• Deductions for imported materials will be restricted as follows:
  • Materials imported from head office: a maximum of 85% of the corresponding revenue from the imported materials (previous limit was 85% to 90% of corresponding revenue).
  • Materials imported from related entities: a maximum of 90% of the corresponding revenue from the imported materials (previous limit was 90% to 93.5% of corresponding revenue).
  • Materials imported from third parties: a maximum of 95% of the corresponding revenue from the imported materials )previous limit was 93.5% to 96.5% of corresponding revenue).

• Deductions for the cost of design work carried out outside Kuwait will be limited to:
  • 75% of the design revenue, for design work carried out by head office (previously the limit was 75% to 80%).
  • 80% of the design revenue, for design work carried out by related entities (previously the limit was 80% to 85%).
  • 85% of the design revenue, for design work carried out by third parties (previously the limit was 85% to 90%).

• Deductions for the cost of consultancy work carried out outside Kuwait will be limited to:
  • 70% of the consultancy revenue for costs related to work carried out at the head office (previously the limit was70% to 75%).
  • 75% of the consultancy revenue for costs related to work carried out by related entities (previously the limit was75% to 80%).
  • 80% of the consultancy revenue for costs related to work carried out by third parties (previously the limit was80% to 85%).

• Deductions for lease/rental costs of assets leased from the head office, subsidiaries and related entities will be limited to the depreciation charge on the corresponding assets, based on the tax depreciation rates specified in the Kuwait tax regulations.

Your BDO contact in Kuwait:

QAIS M. AL NISF
qais.alnisf@bdo.com.kw

Your BDO contacts in Kuwait:

RAMI ALHADHRAMI
rami.alhadhrami@bdo.com.kw