Kuwait Introduces New Tax System to Boost Public Revenue to Historic Highs
KUWAIT CITY — Kuwait is set to introduce two new taxes in the 2027-2028 fiscal year, projected to generate nearly $1.5 billion for state coffers as the country pushes to reduce its dependence on hydrocarbons and boost non-oil revenues to historic highs.
The new taxes are expected to take effect on April 1, 2027. Finance Minister Noora Al-Fassam said the measures could generate approximately $825 million annually from multinational companies, while a separate “sin tax” targeting alcohol, tobacco, vaping products, and sugary drinks could fetch nearly $645 million once fully implemented.
New Tax Structure
Under the new system, 255 foreign units along with 45 Kuwaiti entities and other Gulf oil producers will be subject to a new levy. The sin tax, which has already been enforced but with revenue collection beginning next fiscal year, follows similar measures already in place across several regional countries.
Ali Al Anzi, manager of Kuwait-based Al Manakh economic consulting centre, said the introduction of taxes is unlikely to deter major investors, noting that Kuwait remains a highly lucrative market. “The 15 percent tax targets only large businesses with large global revenues, and the sin tax is already enforced in several regional countries,” he said.
The National Bank of Kuwait projects the country’s fiscal deficit will decline to about 3 percent of GDP in 2027-2028. Non-hydrocarbon revenue has historically accounted for between 15 and 20 percent of Kuwait’s total budget.
Broader Economic Reforms
The tax measures are part of a wider reform push under Kuwait Vision 2035. The government has overhauled real estate, tax, and economic laws, including allowing 100 percent foreign ownership, real estate ownership rights, and long-term residency permits for major investors.
Recent reforms include a November 2025 cabinet approval of a draft law regulating digital commerce, introducing regulatory sandboxes for innovators. In 2025, Decree-Law 60 set a public debt ceiling of $98 billion and allowed issuance of financial instruments with maturities of up to 50 years.
Legal experts say the new tax legislation is not just a regulatory framework but a decisive factor shaping the investment climate and guiding economic behaviour. Dr Ali Al-Mutairi, Dean of the College of Administrative Sciences at Kuwait University, said reviewing existing legislation aims to create a modern legal environment aligned with comprehensive development needs.
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