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May 15, 2026

This Rule outlines the tax treatment of commissions for agents and sponsors. It establishes a maximum allowable commission of 2% of the executed portion of an incorporated body's annual contracts. This calculation is performed after excluding reimbursed revenues, other income, and revenues exempted under Double Taxation Agreements. The Rule specifies deductions for subcontracted work by the agent/sponsor and disallows commissions for bodies participating in Kuwaiti companies or certain joint ventures. It also exempts producer agents in the insurance sector and mandates consultation with the Tax Department for exceptional cases.

Executive Rule No. 36 Concerning commission of the agent and the sponsor

Article No. 3 of the Executive Regulations

First: A commission for the agent and the sponsor (jointly) shall be allowed at a maximum rate of 2% of the executed portion of the contracts concluded by the incorporated body annually after excluding the reimbursed revenues, other income, and exempted revenue by virtue of Double Taxation Agreements and after reviewing the supporting documents.

Second: In case the agent or the sponsor is subcontractor for the Incorporated Body, the portion executed by the agent or the sponsor for the Incorporated Body shall be deducted before calculating the agent or the sponsor commission.

Third: Agent or sponsor commissions shall not be allowed as cost for the incorporated body participating in a Kuwaiti company, and no commission shall be allowed for them in the joint ventures where the partner is the agent or the sponsor.

Fourth: This Executive Rule shall not apply to the Incorporated Bodies practicing in insurance activities when the agent is a producer agent.

Fifth: Special and exceptional cases relating to the agent or the guarantor shall be separately treated after consulting the Tax Department in this regard.