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May 15, 2026

This Rule defines the tax treatment for grants and donations, specified as uncompensated cash or in-kind contributions. Under Article 3, donations to governmental institutions in Kuwait are fully deductible. Donations to licensed private Kuwaiti bodies are deductible up to 2.5% of the incorporated body's net income before this deduction. The Rule requires all donations to be genuine and supported by documentation. Contributions to natural individuals are not deductible. Special cases must be reviewed separately with the Tax Department, and the text provides illustrative examples for calculation.

Executive Rule No. 40 Concerning grants and donations

Article No. 3 of the Executive Regulations:

Includes all grants and donations given in cash or in kind, by the donor without compensation.

First: Tax Treatment:

Donations, grants or aids granted to governmental institutions in the State of Kuwait are fully deductible whether in cash or in kind.
Donation, grants, or monetary aids paid to private licensed Kuwaiti bodies in the State of Kuwait, such as organizations, charitable and social associations, shall be allowed provided that deduction does not exceed 2.5% of the Incorporated Body's net income in accordance with the tax declaration, before this deduction is allowed.
Verifying that the donation is genuine and supported with documents and is not offset by any services.
Donations, grants or aids given to natural individuals shall not be accepted.

Second: Special and exceptional cases relating to donations and grants shall be treated separately after consulting the matter with the Tax Department.

Example:

An Incorporated Body submits its tax declaration with a net profit of KD 90,000. The following was shown from the declaration's attachments:

Total revenues	KD 1,000,000
Total costs	KD 910,000
KD 10,000 grants thereof

The tax treatment of grants item for the following cases:

First: grants fully paid to governmental bodies:

The grants shall be fully approved as they are paid to a governmental body, provided that supporting documents are presented.

Second: grants fully paid to private licensed Kuwaiti bodies:

Net profit before deducting the grant = KD 90,000 + 10,000 = KD 100,000.

The approved grant value = 100,000 X 2.5% = KD 2,500

The disallowed = 10,000 – 2,500 = KD 7,500 added back to the profit.

From the above, an amount of KD 2,500 shall be approved as grants paid to licensed Kuwaiti bodies, provided that supporting documents are presented.

Third: part of the grant is paid to a governmental body and the other part is paid for licensed private Kuwaiti bodies:

In the previous example, assuming that KD 3,000 of the grant is paid to a governmental body and the remaining amount of KD 7,000 is paid to a licensed Kuwaiti body, the tax will be treated as follows: