State of Kuwait

Kuwait does not impose personal income tax on salaries, wages or other income earned by individuals, regardless of their residency status. This means that both Kuwaiti nationals and expatriates are not subject to income tax on employment income, making Kuwait one of the few countries with a tax-free regime for personal earnings. However, while there is no personal income tax, certain business-related taxes may apply to corporate entities and foreign companies operating in Kuwait.

Kuwait has no traditional payroll taxes such as income tax or social security contributions for expatriate employees, but Kuwaiti nationals are required to contribute to the Public Institution for Social Security (PIFSS). Expatriate employees are not subject to these contributions. For Kuwaiti employees, the employer contributes 11.5% of the employee’s monthly salary to the PIFSS, while the employee contributes 8%, plus an additional 2.5% supplementary contribution on earnings up to KWD 1,500. Contributions are subject to salary ceilings, currently capped at KWD 2,750 per month (with the supplementary portion capped at KWD 1,500). These contributions fund pensions, disability and death benefits. Additionally, Kuwait provides a limited unemployment insurance scheme that applies to Kuwaiti nationals working in the private and oil sectors, administered by the PIFSS. Introduced under Law No. 101 of 2013, the system offers financial support to eligible citizens who lose their jobs involuntarily. Both employers and employees contribute 0.5% of their employee’s monthly salary towards the scheme. Expatriate employees are not covered under this system, and employers are not obligated to make similar contributions for them. Expatriates are not subject to social security contributions. Instead, they are generally entitled to end-of-service indemnity (gratuity) under the Kuwait Labour Law, calculated based on length of service and the terms of employment.

Employers must register Kuwaiti employees with the PIFSS within ten days of their employment start date. Monthly salary reports and social security contributions (including unemployment insurance) must be submitted and paid at the beginning of the month following the payroll period. Late payments may result in penalties and additional charges. While there is no individual tax filing, employers are responsible for ensuring that annual records align with monthly reports. Expatriates are not subject to social security contributions, so these reporting obligations apply only to Kuwaiti nationals.

Employers and payroll providers are required to maintain accurate payroll records, including employment contracts, salary and allowance details, social security contribution records and proof of payments to the PIFSS. These records must be retained for at least five years and be readily available for inspection by authorities. Non-compliance with registration, reporting or payment obligations can result in penalties such as fines, monthly interest on overdue contributions and possible legal action. Employers that submit incorrect information or fail to register employees may face additional financial sanctions.