Kuwait’s new taxes expected to lift non-oil income to record high

• $1.5bn of revenue expected in 2027-28
• 300 multinationals to be taxed
• ‘Sin tax’ on tobacco, alcohol and more

New levies on multinational companies and a “sin tax” on harmful products are forecast to earn Kuwait record high non-oil revenues in the next fiscal year, helping to reduce the Gulf state’s dependence on hydrocarbons.

The two types of tax could fetch the government nearly $1.5 billion during the 2027-2028 fiscal year, starting on April 1 next year, experts believe.

A tax on multinational companies, including 255 foreign units and 45 from Kuwait and other Gulf oil producers, is expected to generate about KD250 million ($825 million) per year, then finance minister Noora Al-Fassam said last year.

A sin tax, which normally targets alcohol, tobacco, vaping products, and sugary drinks, could fetch nearly KD200 million once it is in full force, Al-Fassam said.

“The first tax has already been enforced but collection of revenue will be in the next fiscal year,” said Ali Al Anzi, manager of the Kuwait-based Al-Manakh economic consulting centre. “The sin tax will also be collected during that year and this means Kuwait’s non-oil income could climb to its highest level.”

In a budget report published in the official gazette last week, the finance ministry said it is bracing to enforce the two taxes during 2027-2028. Revenue from both taxes could reach KD450 million, it said.

Kuwait is heavily reliant on oil sales as non-hydrocarbon revenues have generally accounted for between 15 percent and 20 percent of the total budget in recent years.

Most of its non-oil revenues are generated from customs duties and government services fees, which were raised under an Emiri decree last year.

The National Bank of Kuwait (NBK) said in a report this week that it expected the country’s fiscal deficit to decline to about 3 percent of GDP in 2027-2028, due to the enforcement of the new taxes and the expected resumption of oil exports, which were harmed by Iran’s closure of the vital Strait of Hormuz during the conflict.

NBK forecasts that the additional income from the new taxation would be equivalent to 0.8 percent of total GDP.

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Al Anzi said the new taxes were unlikely to scare off major investors on the grounds that Kuwait remains a lucrative market and the taxes so far are within global criteria.

“The 15 percent tax announced last year targets only large businesses with large global revenues and the sin tax is already enforced in several regional countries,” he said. “Kuwait has also introduced business-friendly reforms such as 100 percent foreign ownership, real estate ownership rights and long residency permits for major investors.”

Announcing the 2026-2027 budget in February, the finance ministry projected a 55 percent increase in the deficit due to an expected fall in oil earnings.

Revenues were forecast at KD16.3 billion ($53.8 billion) and expenditure at KD26.1 billion ($86.2 billion), with a projected shortfall of KD9.8 billion.

The emirate has resorted to domestic and foreign borrowing to cover the shortfall following the approval of a new debt law in March 2025.