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Kuwait 2026: The Strategic Shifts Investors Need to Watch Now
11 min 2 sec Written by
a.dikos@tamimi.com 
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For decades, Kuwait’s investment story was simple: oil. That is changing. Despite heightened geopolitical tensions and route risk, Kuwait ‑is embedding new tax and governance rules while pushing long-‑stalled infrastructure projects into execution.
- A 15% corporate income tax has been implemented;
- WLL governance thresholds have been rewritten;
- Law No. 1 of 2024 purports to allow foreign branches to operate without a local agent, though enforcement and practical application remain uncertain; and
- Billions of dollars in project spend are flowing into ports, power and housing.
The question for boards is no longer whether Kuwait is reforming, but whether their existing structures and assumptions still fit the post-Pillar-Two, reform-driven Kuwait of 2025–2026.
1. Macro and Development Anchor: Growth, Capex and Execution
Forecasts from National Bank of Kuwait and other international institutions, including the IMF and Allianz Trade, point to non‑oil real GDP growth of around 3.3% in 2026, up from roughly 2.3–3.0% in 2025, consistent with PMI readings that have signalled solid expansion. The International Monetary Fund (IMF) estimates overall real GDP growth at approximately 3.9% in 2026, reflecting an expected expansion of oil output alongside improving non-oil activity. Corporate loan growth reached 6.1% year-on-year by September 2025, double-digit real estate sales growth was recorded over the first nine months of 2025, and project awards were on track to match or exceed 2024’s solid KD 2.6 billion.
The Annual Development Plan 2025/2026 is the macro anchor. By early 2026, Kuwait had disbursed over KD 600 million — more than 40% of its KD 1.361 billion development budget — across 134 projects. The 2025–2026 budget allocates roughly USD 6 billion to major infrastructure. Ten flagship projects include:
- Kuwait International Airport Terminal 2 expansion, targeted for completion around 2027.
- Mubarak Al-Kabeer Port on Bubiyan Island and associated logistics infrastructure, a centrepiece of Vision 2035’s northern economic zone.
- Major wastewater, environmental, power, water, housing and health projects, including the Umm Al-Haiman schemeand the Al-Zour North IWPP.
Together, these projects aim to position Kuwait as a regional financial and commercial hub with stronger infrastructure, a more active private sector and improved public-sector delivery.
2. Corporate Tax: The Domestic Minimum Top-Up Tax and the Business Profits Tax
From 2025, Kuwait has joined the ranks of GCC jurisdictions imposing a comprehensive corporate income tax aligned with international standards, driven by two key developments.
The first is the introduction of the Domestic Minimum Top-Up Tax (DMTT) under Decree-Law No. 157 of 2024, issued by the Kuwaiti Cabinet on 31 December 2024. The DMTT imposes a 15% effective tax rate on multinational enterprise (MNE) groups operating in Kuwait whose consolidated annual revenue equals or exceeds EUR 750 million in at least two of the last four fiscal years. The regime, which takes effect for financial years beginning on or after 1 January 2025, is closely aligned with the OECD’s Pillar Two Global Anti-Base Erosion (GloBE) Model Rules. Executive Regulations were subsequently issued on 30 June 2025 under Ministerial Resolution No. 55 of 2025, largely mirroring the GloBE framework.
Entities subject to the DMTT are no longer expected to be within the scope of Kuwait’s existing corporate income tax, Zakat, and the National Labour Support Tax. MNEs must register with the Kuwait Tax Authority within nine months of the law’s effective date (by 30 September 2025) and submit tax returns with audited financial statements within 15 months after the end of the tax period. Non-compliance attracts significant penalties, including fines of 5% to 25% of tax due for late filing and, in cases of tax evasion, criminal sanctions of up to three years’ imprisonment and/or fines of up to three times the evaded tax.
The second development is progress on a proposed Business Profits Tax Law, which would introduce a 15% corporate income tax applicable to a wider base of domestic and multinational businesses, excluding those with annual revenues below KWD 1.5 million. The proposal also includes a 5% withholding tax on select outbound payments—such as dividends, royalties, and technical service fees—and is projected to yield KWD 250–300 million in annual revenue.
Meanwhile, Kuwait’s existing tax regime continues to impose a flat 15% tax on profits of companies owned by non-GCC nationals carrying on trade or business in Kuwait, whether directly or through an agent. Combined with existing surcharges such as the 1% Zakat on GCC-owned companies and the 2.5% National Labour Support Tax on listed entities, Kuwait is steadily evolving into a comprehensive corporate tax jurisdiction for multinational structures.
For corporate boards, 2025–2026 marks a critical juncture to reassess tax implications in Kuwait including permanent establishment exposure, transfer pricing arrangements, Kuwait tax nexus, and treaty positions in Kuwait. The DMTT further enforces the arm’s-length principle for related-party transactions and embeds robust general anti-avoidance rules to ensure tax integrity.
3. Companies Law: Article 116 and the Balance of Power in WLLs
Kuwait’s corporate-law reform is incremental but meaningful. One change already in force directly affects foreign shareholders: Decree-Law No. 106 of 2024, amending Article 116 of the Companies Law on extraordinary general meetings (EGMs) for limited liability companies (WLLs).
Previously, an extraordinary general meeting required attendance and approval from partners holding at least 75% of the company’s capital. The amendment now allows a second meeting to be held if this quorum isn’t met, where attendance by partners owning more than half the capital is sufficient, and decisions at either meeting can be passed by a majority holding over 50% of the capital.
This shift carries significant implications:
- It strengthens majority shareholders, making it easier to implement restructurings, capital measures and other extraordinary actions.
- It reduces minority de facto vetoes. Given the 49% ceiling on foreign ownership under the Commercial Code, local partners now hold the upper hand in many WLL structures, as resolutions can pass without the foreign partner’s attendance or vote.
- The Ministry of Commerce and Industry can now call an EGM if management refuses to do so, at the request of partners holding at least half the capital.
The Ministry has also signalled a broader push to modernise the Companies Law — including simpler incorporation, updated director duties and stronger shareholder protections — as part of the Vision 2035 legislative programme.
For corporate investors, Kuwait’s transition from an informal, relationship-based model to a more codified corporate framework is already prompting reviews of WLL shareholders’ agreements, reserved-matters lists, directors’ and officers’ insurance policies, and delegation frameworks — and, where not yet undertaken, such reviews should now be considered in light of the new Article 116.
4. Foreign Branch Offices: Law No. 1 of 2024 – Promising on Paper, Uncertain in Practice.
Law No. 1 of 2024 (“Law 1/2024”) was promulgated in early 2024, Purporting to amend Article 24 of the Commercial Law (Decree Law No. 68 of 1980). and Article 31 of the Public Tenders Law. Based on the plain language of the Law 1/2024, it purports to remove the requirement for foreign companies to conduct business in Kuwait through a local agent, effectively overriding Kuwait’s general foreign ownership restrictions (such as the 49% cap) as outlined in the Commercial Law.
While Law 1/2024 theoretically allows foreign entities to open companies and operate in Kuwait independently—including bidding for and executing public contracts through their own branches—there is still considerable ambiguity around its practical application. Our interpretation is that the law’s intent is primarily to apply to companies seeking to engage in public tenders. Executive regulations, which have not yet been issued, are expected to clarify whether the law will apply exclusively to foreign companies involved in tendering or extend to all foreign entities operating in Kuwait.
As things stand, Law 1/2024 is fully promulgated but not being enforced and has no practical effect. Investors should not rely on it to structure a Kuwait entry without a local partner until the executive regulations are issued. In the meantime, the KDIPA framework (which already permits 100% foreign ownership in select sectors) and the traditional WLL structure with a Kuwaiti partner remain the established routes for foreign direct investment.
5. Capital Markets, Debt and PPP: Towards Bankable Structures
Kuwait’s Capital Markets Authority (CMA) launched the second batch of Phase Three of its Market Development Program in early 2025, introducing structural and regulatory reforms to strengthen market confidence and attract foreign investment. Key measures include:
- Launch of a Central Counterparty (CCP) clearing framework to mitigate settlement risk and align clearing operations with international standards.
- Streamlining of cash settlement processes via the KASSIP platform, enabling smooth transactions through local banks and the Central Bank of Kuwait.
- Upgrading brokerage firms to qualified intermediary status, reinforcing market integrity and operational efficiency.
- Deployment of enhanced digital infrastructure to support future listings of exchange-traded funds (ETFs) and fixed-income instruments such as bonds and sukuk.
These reforms align with the Public Debt Law (Law No. 60 of 2025), enacted in March 2025, which restored Kuwait’s sovereign borrowing capability after an eight-year pause. The law authorises the State to incur public debt of up to KWD 30 billion (approx. USD 98 billion), with maturities up to 50 years from the effective date of the Public Debt Law. By September 2025, total debt issuance reached KWD 5.5 billion, including a USD 11.3 billion Eurobond that drew substantial investor interest.
Kuwait’s Annual Development Plan 2025/2026 also emphasises a major expansion of privatisation and public–private partnerships (PPPs), with reforms to ease foreign-investor participation. This means:
- Infrastructure in power, water, waste, and environmental services will increasingly be delivered through PPP and concession models, led by the Kuwait Authority for Partnership Projects (KAPP) and relevant ministries.
- Critical transport and logistics projects, such as Mubarak Al-Kabeer Port and its associated corridors, are now positioned as long-term, contract-based investment opportunities rather than direct state-led developments.
For investors in energy, utilities, logistics, and social infrastructure, Kuwait in 2026 is emerging as a PPP and concession-driven market, where successful participation depends on structuring, financing, and delivering projects under a rapidly modernising capital-markets and PPP framework.
6. Banking Sector: Strong Foundations and Islamic Finance Leadership
Kuwait’s banking sector remains a strong pillar of its reform agenda, posting 5% net profit growth and a 4.3% rise in total assets to KWD 115 billion in 2024, with Islamic finance accounting for around half of sector assets and recent mergers and acquisitions consolidating its leading players. Fitch and S&P continue to assign Kuwait and its major banks stable outlooks, and—even allowing for heightened regional tensions—the sector is expected to maintain solid capital buffers and high single‑digit credit growth into 2026, underpinned by large sovereign financial assets and ongoing government investment.
7. Sector Focus 2026: Where Capital Is Moving
Several sectors stand out in 2026. Oil, gas and downstream continue to attract major investment in capacity, pipelines, storage and refinery upgrades, with sustainable crude capacity around 3.2 million barrels per day. Power, water and environmental schemes, ports and logistics (including Mubarak Al-Kabeer Port), large housing and social-infrastructure programmes, and a consolidating, tech-enabled financial sector remain the main corridors for private and foreign capital.
8. Investor Structuring Strategies for Kuwait
In 2025–2026, sophisticated investors are retooling their Kuwait exposure around a few core moves:
- Build tax-aware Kuwait platforms – consider how any local holding and operating structures will be impacted by the DMTT and anticipated Business Profits Tax, revisit permanent-establishment and any potential Kuwait tax nexus, tighten intra-group pricing, and align documentation with Pillar Two-style expectations.
- Recalibrate WLL governance – update shareholders’ agreements, veto mechanics and reserved-matters lists to preserve negotiated protections now that Article 116 allows EGM decisions to pass with just over 50% rather than 75% of capital.
- Consider direct branch presence cautiously – Law No. 1 of 2024 purports to allow foreign branches without a local agent, especially for government tenders, but the law is not currently being enforced and executive regulations have not yet been issued.
- Anchor structures in project SPVs and JVs – use Kuwaiti SPVs and JVs tailored to specific PPP, concession or EPC contracts, with Kuwaiti law, onshore enforcement and local security built in from the outset.
- Use selective KDIPA 100% foreign-owned vehicles – for control- and IP-sensitive plays (technology, specialised services, industrial support), obtain KDIPA-licensed fully foreign-owned entities and integrate them into wider GCC structures.
Overlay group-wide risk reviews – run portfolio-level reviews of route risk, sanctions exposure, insurance coverage and force-majeure drafting as risk committees re-map Gulf footprints for a more volatile environment.
9. Key Boardroom Questions – Kuwait 2026
- How do the DMTT, proposed Business Profits Tax and existing 15% CIT impact our overall tax position including our effective tax rate, permanent establishment profile and transfer pricing in 2026?
- Does the new >50% EGM threshold under Article 116 weaken any veto or blocking rights in our Kuwait WLLs, and have we updated shareholders’ agreements and reserved matters?
- Given that Law No. 1 of 2024 is not yet being enforced, should we defer plans for a direct Kuwait branch until the executive regulations are issued and continue pursuing government tenders through established structures?
- Which priority energy, utilities, logistics or social-infrastructure projects justify Kuwait-specific JVs or SPVs rather than simple contractual or agency arrangements?
- In control- and IP-sensitive sectors, are we using KDIPA-licensed 100% foreign-owned entities or relying on outdated, partner-heavy models?
- Do our Kuwaiti contracts properly price and allocate heightened geopolitical, sanctions, route, environmental and force-majeure risks, and align with our positions in other MENA countries?
Why Get in Touch with the Al Tamimi Team
Kuwait’s 2025–2026 reform cycle is the most significant in a generation, touching tax, corporate governance, capital markets, public debt and foreign investment law simultaneously. Navigating these changes requires more than generic market intelligence – it demands on-the-ground legal expertise with deep roots in Kuwait and across the wider GCC.
Al Tamimi’s integrated offering covers the full range of disciplines Kuwait’s reform agenda demands: corporate structuring and M&A, tax advisory, banking and finance, capital markets, construction and infrastructure, employment, regulatory compliance and dispute resolution. The firm combines licensed local lawyers with rights of audience before Kuwaiti courts and international practitioners with cross-border structuring experience across the GCC.
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