India–Kuwait tax treaty — rates, PE and MLI

The rates, at a glance

Every figure below is taken from the article named beside it, not from a rates table. Read the condition in the same row before you use the rate — in this treaty the condition is usually the whole answer.

Income	Rate	The condition attached to it	Article
Dividends	10 per cent of the gross amount — A single flat ceiling with no shareholding threshold and no second tier. Art. 10(2). The condition is that 'the recipient is the beneficial owner of the dividends'. Note that Art. 10(1) also carries a beneficial-ownership condition, which is unusual — it reads 'Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State who is the beneficial owner of such dividends may be taxed in that other State', so beneficial ownership is a condition of the residence-State charging rule as well as of the source-State ceiling. Almost every other treaty in this batch puts the condition only in paragraph 2.	None for the reduced rate — Art. 10(2) is one sentence with one rate, and there is no participation test. But there is A complete exemption for sovereign and central-bank shareholders and IT is in the dividend…	Article 10, paragraph 1 (residence-State rule, itself conditioned on beneficial ownership); 2 (10 per cent ceiling, with the profits-of-the-company saving in the same paragraph); 3 (sovereign, central-bank and agreed-institution EXEMPTION); 4 (definition); 5 (PE/fixed-base carve-out, disapplying paragraphs 1 AND 2 only); 6 (no extra-territorial taxation of dividends, no tax on undistributed profits)
Interest	10 per cent of the gross amount, conditional on 'the recipient [being] the beneficial owner of the interest'. Art. 11(2). As with dividends, Art. 11(1) also carries a beneficial-ownership condition on the residence-State rule.	The exemption is in article 11 itself, at paragraph 3, and IT names the central bank expressly — which is a real advantage over the Qatar treaty, where Article 11 names nobody and the whole institutional…	Article 11, paragraph 1 (residence-State rule, conditioned on beneficial ownership); 2 (10 per cent ceiling); 3 (exemptions — (a) generic government, (b) THE CENTRAL BANK, (c) agencies or financial institutions agreed by exchange of notes); 4 (definition, expressly excluding PENALTY CHARGES FOR LATE PAYMENT); 5 (PE/fixed-base carve-out, disapplying paragraphs 1 and 2 only); 6 (source rule with PE-borne deeming); 7 (special-relationship excess)
Royalties	10 per cent of the gross amount, conditional on the beneficial owner being a resident of the other Contracting State. Art. 12(2), which covers royalties and fees for technical services together at a single rate. A single flat rate: no split between equipment royalties and intellectual-property royalties, and no split between royalties and FTS.	Article 12 is mis-titled and this is A genuine trap — see fts.rate. The article heading reads simply 'royalties', but every operative paragraph speaks of 'royalties or fees for technical services' and Art…	Article 12, paragraph 2 (rate, covering royalties and FTS together); 3(a) (definition of royalties); 3(b) (definition of fees for technical services); 4 (PE/fixed-base carve-out disapplying paragraphs 1 AND 2); 5 (source rule with PE-borne deeming); 6 (special-relationship excess)
Fees for technical services	10 per cent of the gross amount — the same rate and the same paragraph as royalties, Art. 12(2). There is an FTS article here, but you will not find IT by reading the article headings, and that is the point worth recording. Article 12 is headed 'royalties' and nothing else in the notified text's own heading. But its substance is not confined to royalties: Art. 12(1) speaks of 'Royalties or fees for technical services arising in a Contracting State'; Art. 12(2) sets the 10 per cent ceiling on 'such royalties or fees for technical services'; Art. 12(3)(b) defines 'fees for technical services'; and paragraphs 4, 5 and 6 each deal with both. A practitioner scanning the article headings of this Agreement for a fees-for-technical-services article will conclude, wrongly, that there is none — the same conclusion that is correct for Thailand, Nepal, Bangladesh and Saudi Arabia. Kuwait is the odd one out among the treaties in this batch that appear to lack an FTS article: it has one, hidden under a royalties heading.	There is no make-available limb, no 'ancillary and subsidiary' limb and no technical-plan-or-design limb. Art. 12(3)(b) in full: 'The term "fees for technical services" as used in this Article means payments…	Article 12 — headed 'ROYALTIES' but covering royalties and fees for technical services throughout, paragraph 2 (rate); 3(b) (definition, with the Art. 14/Art. 15 exclusions); 4 (PE/fixed-base carve-out); 5 (source rule)

Status

In force	17 october 2007 — the date of receipt of the later of the two notifications, under Art. 30(2). Signed in india (at New Delhi) on 15 june 2006, 'corresponding to 19th Jamad al awal, 1427 H' — the notified text gives both the Gregorian and the Hijri date — in Hindi, Arabic and English, all texts equally authentic, the english text to prevail on divergence. Effect under Art. 30(3), and IT is A single symmetrical rule expressed in indian terms for both states, which is a drafting oddity worth noting: 'The provisions of this Agreement shall have effect in respect of income derived in any fiscal year beginning on or after the first day of april next following the calendar year in which the Agreement enters into force.' There is no separate Kuwaiti formulation and no separate earlier date for withholding on either side. Entry into force fell in calendar 2007, so the effective date is 1 april 2008 (Indian FY 2008-09 onwards), and the notification says so in terms ('with effect from the 1st day of April, 2008'). There is no predecessor treaty terminated by this agreement — Article 30 contains no superseding paragraph, and this is the first comprehensive India-Kuwait double taxation agreement. Article 31 is headed duration and termination.
Given effect by	Notification No. S.O. 2000(E), dated 27-11-2007 — issued under section 90 of the Income-tax Act 1961, directing that all the provisions of the Agreement be given effect to in India 'with effect from the 1st day of April, 2008'. The citation line as carried in the notified text continues: 'as amended by Notification No. S.O. 1823(E) [No. 21/2018 (F. No. 501/03/88-ftd-II)], dated 4-5-2018'. That amending reference is genuine — see amending_notifications.
Modified by the MLI	No synthesised text was found for this treaty in the source searched.
Principal purpose test	There is A purpose test but its threshold is the highest — and therefore the most taxpayer-favourable — in the entire batch, and the difference is A single phrase that is easy to misread. Art. 27, first sentence: a resident is denied benefits 'if its affairs were arranged with the primary purpose to take benefits of this Agreement.' compare the others. Malaysia's Art. 28(2) and Nepal's Art. 28 both say 'the main purpose or one of the main purposes'. The MLI Art. 7(1) PPT, and the Qatari Art. 28 and substituted Sri Lankan Art. 28(6), say 'one of the principal purposes'. Saudi Arabia's Art. 26(2) says 'the main purpose or one of the main purposes of the creation of such enterprise'. Kuwait says 'the primary purpose' — definite article, singular, and 'primary' rather than 'main'. On its face that requires the treaty benefit to have been the dominant purpose of the arrangement, not merely one among several main purposes. A structure with a genuine commercial primary purpose and a substantial but secondary treaty motive is caught by Malaysia, Nepal, Qatar and Sri Lanka, and is not caught by the words used here. Against that, there is no object-and-purpose saving clause of the kind the MLI PPT contains, so a claimant who does fall within the test has no escape. The preamble contains no beps treaty-shopping recital. Whether an MLI PPT now applies is not established by this source; see gaps. If one does, it would lower the threshold materially — from 'the primary purpose' to 'one of the principal purposes' — which would be one of the largest practical changes the MLI could make to any treaty in this batch.

Dividends

Rate	10 per cent of the gross amount — A single flat ceiling with no shareholding threshold and no second tier. Art. 10(2). The condition is that 'the recipient is the beneficial owner of the dividends'. Note that Art. 10(1) also carries a beneficial-ownership condition, which is unusual — it reads 'Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State who is the beneficial owner of such dividends may be taxed in that other State', so beneficial ownership is a condition of the residence-State charging rule as well as of the source-State ceiling. Almost every other treaty in this batch puts the condition only in paragraph 2.
The holding that unlocks it	None for the reduced rate — Art. 10(2) is one sentence with one rate, and there is no participation test. But there is A complete exemption for sovereign and central-bank shareholders and IT is in the dividend article itself, which is unusual. Art. 10(3): 'Notwithstanding the provisions of paragraphs 1 and 2, dividends paid by a company which is a resident of a Contracting State shall not be taxable in that contracting state if the beneficial owner of the dividends is: (a) the Government, a political sub-division or a local authority of the other Contracting State; or (b) the central bank of the other contracting state; or (c) other governmental agencies or governmental financial institutions as may be specified and agreed to in an exchange of notes between the competent authorities of the Contracting States.' Contrast the Qatar treaty, whose Art. 10(3) sovereign exemption covers only the State, its political subdivisions and local authorities, with no central-bank limb and with the Protocol's institutional extension confined to Article 11. Here the central bank is named in the dividend article itself.
Where this comes from	Article 10, paragraph 1 (residence-State rule, itself conditioned on beneficial ownership); 2 (10 per cent ceiling, with the profits-of-the-company saving in the same paragraph); 3 (sovereign, central-bank and agreed-institution EXEMPTION); 4 (definition); 5 (PE/fixed-base carve-out, disapplying paragraphs 1 AND 2 only); 6 (no extra-territorial taxation of dividends, no tax on undistributed profits)

The art. 10(4) definition is the wide civil-law form, as in the Saudi treaty: 'income from shares including "jouissance" shares or "jouissance" rights, mining shares, founders' shares or other rights, not being debt-claims, participating in profits'. Note A drafting point on the carve-out: Art. 10(5) disapplies 'the provisions of paragraphs 1 and 2' where the holding is effectively connected with a PE or fixed base — it does not disapply paragraph 3. So on the face of the text the sovereign and central-bank exemption survives a PE connection, unlike under the Qatar treaty where Art. 10(5) expressly disapplies paragraphs 1, 2 and 3. There is no underlying tax credit. There is open-ended tax sparing in Art. 23(3) — see practitioner_notes.

Interest

Rate	10 per cent of the gross amount, conditional on 'the recipient [being] the beneficial owner of the interest'. Art. 11(2). As with dividends, Art. 11(1) also carries a beneficial-ownership condition on the residence-State rule.
Exemptions	The exemption is in article 11 itself, at paragraph 3, and IT names the central bank expressly — which is a real advantage over the Qatar treaty, where Article 11 names nobody and the whole institutional exemption has to be found in the Protocol. Art. 11(3) exempts interest where the beneficial owner is: '(a) the Government, a political sub-division or a local authority of the other Contracting State; or (b) the central bank of the other contracting state; or (c) other governmental agencies or financial institutions as may be specified and agreed to in an exchange of notes between the competent authorities of the Contracting States.' note that limb (b) is generic, not nominal. It says 'the Central Bank of the other Contracting State' rather than naming the Reserve Bank of India and the Central Bank of Kuwait. That is better drafting than the named lists in the Malaysian, Thai, Sri Lankan, Nepalese and Saudi treaties, because it cannot be defeated by a renaming of the institution — the problem that arises on the Saudi treaty, which names the 'Saudi Arabian Monetary Agency' by its former title. Limb (c) is not self-executing and its form is prescribed: the agencies or financial institutions must be 'specified and agreed to in an exchange of notes between the competent authorities'. Until such an exchange of notes exists, an unlisted state-owned lender pays 10 per cent. Contrast the Saudi treaty's Art. 11(3)(c), which is self-executing for any financial institution wholly owned directly and controlled by the Government, requiring no agreement at all. The kuwait investment authority is not named anywhere in article 11 — though see the next point, which may make that irrelevant. A subtle but real textual difference between art. 10(3)(c) and art. 11(3)(c) that cuts in the taxpayer'S favour on interest. Art. 10(3)(c) reads 'other governmental agencies or governmental financial institutions'; Art. 11(3)(c) reads 'other governmental agencies or financial institutions' — the word 'governmental' before 'financial institutions' is absent from the interest article. On the face of the text the class of institutions that may be added by exchange of notes for interest purposes is wider than for dividend purposes. And note A drafting defect in art. 11(3) that should not be passed over. The opening words are: 'Notwithstanding the provisions of paragraphs 1 and 2, interest paid by A company which is A resident of A contracting state shall not be taxable in that Contracting State if the beneficial owner of the interest is ...'. The words 'paid by A company' appear to have been carried across from Art. 10(3), where they are apt because dividends are necessarily paid by companies. Read literally, Art. 11(3) does not exempt interest paid by a non-corporate payer — an individual, a firm, a permanent establishment or the Government itself — even where the beneficial owner is the other State or its central bank. Every other treaty in this batch opens the equivalent paragraph with 'interest arising in a Contracting State'. The point is on the face of the notified text and should be flagged rather than silently corrected.
Where this comes from	Article 11, paragraph 1 (residence-State rule, conditioned on beneficial ownership); 2 (10 per cent ceiling); 3 (exemptions — (a) generic government, (b) THE CENTRAL BANK, (c) agencies or financial institutions agreed by exchange of notes); 4 (definition, expressly excluding PENALTY CHARGES FOR LATE PAYMENT); 5 (PE/fixed-base carve-out, disapplying paragraphs 1 and 2 only); 6 (source rule with PE-borne deeming); 7 (special-relationship excess)

The Art. 11(4) definition is the plain one — debt-claims of every kind, Government securities, bonds and debentures including premiums and prizes — with no renvoi limb of the kind the Thai and Saudi treaties carry, and no express Islamic-finance limb of the kind the Qatar treaty carries. Penalty charges for late payment are expressly excluded from Article 11 and, because Article 22 on this treaty has no source-taxation paragraph, they fall to Art. 22(1) and residence-only taxation. Art. 11(5) disapplies only 'paragraphs 1 and 2' where the debt-claim is PE-connected, so on its face the paragraph 3 exemption survives a PE connection.

Royalties

Rate	10 per cent of the gross amount, conditional on the beneficial owner being a resident of the other Contracting State. Art. 12(2), which covers royalties and fees for technical services together at a single rate. A single flat rate: no split between equipment royalties and intellectual-property royalties, and no split between royalties and FTS.
Where this comes from	Article 12, paragraph 2 (rate, covering royalties and FTS together); 3(a) (definition of royalties); 3(b) (definition of fees for technical services); 4 (PE/fixed-base carve-out disapplying paragraphs 1 AND 2); 5 (source rule with PE-borne deeming); 6 (special-relationship excess)

Article 12 is mis-titled and this is A genuine trap — see fts.rate. The article heading reads simply 'royalties', but every operative paragraph speaks of 'royalties or fees for technical services' and Art. 12(3)(b) contains a full FTS definition. The Art. 12(3)(a) royalty definition is the standard one: copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting; any patent, trademark, design or model, plan, secret formula or process; the use of, or the right to use, industrial, commercial or scientific equipment; and information concerning industrial, commercial or scientific experience. The source rule in art. 12(5) is the narrow payer-residence form plus PE-borne deeming, with no place-of-use or place-of-performance fallback of the kind found in the Sri Lankan and Nepalese treaties. There is no MFN clause anywhere in the Agreement or Protocol.

Fees for technical services

Rate	10 per cent of the gross amount — the same rate and the same paragraph as royalties, Art. 12(2). There is an FTS article here, but you will not find IT by reading the article headings, and that is the point worth recording. Article 12 is headed 'royalties' and nothing else in the notified text's own heading. But its substance is not confined to royalties: Art. 12(1) speaks of 'Royalties or fees for technical services arising in a Contracting State'; Art. 12(2) sets the 10 per cent ceiling on 'such royalties or fees for technical services'; Art. 12(3)(b) defines 'fees for technical services'; and paragraphs 4, 5 and 6 each deal with both. A practitioner scanning the article headings of this Agreement for a fees-for-technical-services article will conclude, wrongly, that there is none — the same conclusion that is correct for Thailand, Nepal, Bangladesh and Saudi Arabia. Kuwait is the odd one out among the treaties in this batch that appear to lack an FTS article: it has one, hidden under a royalties heading.
Make-available requirement	No
Where this comes from	Article 12 — headed 'ROYALTIES' but covering royalties and fees for technical services throughout, paragraph 2 (rate); 3(b) (definition, with the Art. 14/Art. 15 exclusions); 4 (PE/fixed-base carve-out); 5 (source rule)

There is no make-available limb, no 'ancillary and subsidiary' limb and no technical-plan-or-design limb. Art. 12(3)(b) in full: 'The term "fees for technical services" as used in this Article means payments of any kind, other than those mentioned in articles 14 and 15 of this agreement as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.' That is the entire definition, and it is word-for-word the Sri Lankan Art. 12(3)(b). It is the broad Indian-domestic-law style formula — managerial services are inside it, and nothing turns on whether technology, knowledge, skill or know-how is transmitted to the payer so that the payer can apply it independently. Routine, repetitive technical support that would escape FTS taxation under the Singapore, UK or US treaties is fully taxable at 10 per cent here, from the first rupee, with no threshold and no de minimis. The only carve-outs are the two cross-references: payments falling under Art. 14 (Independent Personal Services) and Art. 15 (Dependent Personal Services) are excluded, pushing individual professionals into Art. 14 and its own threshold — a fixed base regularly available, or a stay 'amounting to or exceeding 183 days in the aggregate in any fiscal year'. Note that art. 14 on this treaty measures the 183 days over A fiscal year, not A rolling twelve-month period — Malaysia, Thailand, Sri Lanka, Nepal, Saudi Arabia and Qatar all use a twelve-month window commencing or ending in the fiscal year. Art. 14 also contains an unusual retrospective limb: 'If he has or had such a fixed base, or such a stay in the other Contracting State the income may be taxed in the other Contracting State' — the words 'or had' bring a past fixed base into charge. Note also the interaction with article 5: the service PE threshold is '183 days or more' (Art. 5(4)) and — critically — IT is not confined to the same or A connected project, so all service days in the State aggregate regardless of project.

Capital gains on shares

Treatment	Source-state taxation of share gains is fully preserved, in two paragraphs. Art. 13(4): 'Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State.' Art. 13(5): 'Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in the state in which the company issuing the shares is resident.' Note the closing words of paragraph 5 — 'the State in which the company issuing the shares is resident' rather than the terser 'in that State' used by Malaysia, Thailand, Sri Lanka, Nepal, Saudi Arabia and Qatar. The effect is the same but the drafting is more explicit. All gains on shares in an Indian company are taxable in India, whatever the asset composition, whatever the size of the holding and whenever acquired.
Grandfathering	None. There is no grandfathering date, no acquisition-date test, no disposal-date test, no transitional window and no reduced-rate period anywhere in Article 13. This Agreement never conferred a share-gains exemption, so there was nothing to grandfather.
Conditions	(i) art. 13(4) uses the vague word 'principally' with no protocol gloss supplying A percentage — the same position as Thailand, Sri Lanka, Nepal and Saudi Arabia, and unlike Malaysia and Qatar, both of which write 'more than 50 per cent' into the Article. The single-paragraph Protocol says nothing about Article 13. There is no look-back period and no stated testing date. (ii) Art. 13(4) is framed by reference to where the immovable property is situated, so it can reach shares in a company resident in neither State; Art. 13(5) is confined to shares 'in a company which is a resident of a Contracting State'. (iii) the residual paragraph is the orthodox residence-only one: Art. 13(6) makes gains on any other property 'taxable only in the Contracting State of which the alienator is a resident'. Interests in partnerships and other non-share entities, and gains on third-country company shares not caught by para 4, fall to residence-only taxation. (iv) Art. 13(3) gives exclusive residence taxation for ships and aircraft operated in international traffic. (v) article 13 is subject to article 27, but article 27'S threshold is unusually high — it requires that the affairs were arranged with the primary purpose of taking treaty benefits, not merely one of the main purposes. See anti_abuse.ppt. (vi) residence is the real gate on this treaty: because Art. 4(1)(b) requires a Kuwaiti company to be incorporated in kuwait and liable to tax therein, a Kuwaiti entity that is outside the charge to Kuwaiti tax is not a resident at all and never reaches Article 13.
Where this comes from	Article 13, paragraph 1 (immovable property); 2 (PE/fixed-base movable property); 3 (ships and aircraft, residence only); 4 (shares of a company whose property consists directly or indirectly PRINCIPALLY of immovable property); 5 (all other shares in a company resident of a Contracting State); 6 (residual — residence only)

Permanent establishment

Construction or installation PE	183 days or more in any twelve-month period — and the 'or more' matters. Art. 5(3): 'A building site or construction, installation or assembly project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities last 183 days or more in any twelve-month period.' Every other treaty in this batch uses 'more than' its threshold (more than nine months, more than 183 days, more than 182 days, more than six months), so that the threshold day itself is safe. Here the 183RD day creates the permanent establishment. Note also that this construction limb does carry a twelve-month reference period, unlike the Sri Lankan, Nepalese and Saudi construction limbs, which state none. It is a standalone paragraph, not a sub-paragraph of an inclusive list. Supervisory activities sit inside the same threshold. There is no contract-splitting rule and no anti-fragmentation rule — but the Protocol restricts what may be attributed to a construction PE once one exists.
Service PE	183 days or more within any twelve-month period, in A paragraph of its own — and IT is not confined to the same or A connected project, which is the single most important difference between this service PE clause and every other one in this batch. Art. 5(4) in full: 'The furnishing of services, including consultancy or managerial services, by an enterprise of a Contracting State through employees or other personnel engaged by the enterprise for such purpose, in the other Contracting State constitutes a permanent establishment only if activities of that nature continue for a period or periods aggregating 183 days or more within any twelve-month period.' Three qualifiers and one absence. (i) '183 days or more', not 'more than 183 days' — the 183rd day counts. (ii) Days aggregate across periods, so intermittent visits add up. (iii) The window is a rolling twelve months. (iv) the words 'for the same or connected project' — which appear in the Malaysian, Thai, Sri Lankan, Nepalese, Saudi and Qatari service PE clauses — are absent here. On the face of the text, all service days spent in the other State by the enterprise's personnel aggregate towards the 183, whether or not the engagements are related. An enterprise running several unconnected short engagements in India, which would stay below the threshold under every other treaty in this batch, crosses it here. Note also that the paragraph expressly names managerial services as well as consultancy services, which the other clauses do not.
Agency PE	Yes — Art. 5(6), and IT has four limbs, not three. (a) has and habitually exercises an authority to conclude contracts in the name of the enterprise, subject to the carve-out; (b) has no such authority but habitually maintains a stock of goods or merchandise from which he regularly delivers on behalf of the enterprise; (c) habitually secures orders wholly or almost wholly 'for the enterprise itself or for such enterprise and other enterprises which are controlled by IT or have A controlling interest in IT' — group-wide but only vertically, like Bangladesh and unlike Sri Lanka and Qatar, which add sister companies under common control; and (d) — the fourth limb, which appears in no other treaty in this batch — 'in so acting, he manufactures or processes in that contracting state goods and merchandise belonging to the enterprise.' A contract manufacturer or toll processor working on the enterprise's own goods is therefore capable of creating an agency PE on this treaty, on facts that would not create one anywhere else in this batch. Art. 5(7) adds an insurance PE — and, as in the Saudi treaty, IT has no re-insurance carve-out: the words 'except in regard to re-insurance' that appear in the Malaysian, Thai, Sri Lankan, Nepalese and Qatari equivalents are absent. Art. 5(8) protects independent agents but withdraws that protection where the agent's activities are devoted wholly or almost wholly on behalf of that enterprise and other enterprises controlled by IT or having A controlling interest in IT — a single exclusivity test measured across the vertical group, with no additional non-arm's-length condition.
Where this comes from	Article 5, read with the PROTOCOL for what may be attributed once a PE exists

Note that the construction and service limbs are separate numbered paragraphs (3 and 4) rather than sub-paragraphs (a) and (b) of a single paragraph — which produces a real cross-reference problem: Art. 5(6)(a) excludes a person whose 'activities are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment'. On this treaty paragraph 4 is the service PE paragraph, not the preparatory-and-auxiliary exclusion list, which is paragraph 5. The cross-reference appears to have been carried over from the standard layout without renumbering, and read literally it points at the wrong paragraph. Art. 5(2) is a wide inclusive list: a place of management, branch, office, factory, workshop, A sales outlet, A warehouse in relation to A person providing storage facilities for others, 'a mine, an oil or gas well, a quarry or any other place of extraction of natural resources' (unlike the Saudi treaty, an oil well is named here), and A farm or plantation. Art. 5(5) is the original pre-beps preparatory-and-auxiliary list and it is in the older, wider form: sub-paragraphs (a) and (b) expressly include delivery of goods or merchandise ('storage, display or delivery') among the excluded activities, and (a), (b) and (c) are standalone exclusions not themselves subject to a preparatory-or-auxiliary condition. A delivery warehouse is therefore outside the PE definition on this treaty in a way it would not be under a post-beps article. Art. 5(9) is the standard control-is-not-PE saving. The protocol is essential whenever A PE is found — it confines PE profits to receipts attributable to the PE's actual activity, excludes sales, business or supplies executed outside that State, confines survey, construction and installation profits to the part effectively carried out by the PE, and provides that profits related to the part of the contract carried out by the head office 'shall be taxable only in the state of which the enterprise is A resident'.

Anti-abuse: limitation of benefits, and the MLI

LOB	Yes — article 27, headed limitation of benefits, and it is a single unnumbered paragraph of two sentences: 'A resident of a Contracting State shall not be entitled to the benefits of this Agreement if its affairs were arranged with the primary purpose to take benefits of this Agreement. The case of legal entities not having bona fide business activities shall be covered by the provisions of this Article.' There is no objective limitation-of-benefits code of the Sri Lankan kind — no qualified-person gateway, no listed-company test, no ownership test, no base-erosion proviso, no active-trade relief and no competent-authority relief. The second sentence is A bona fide business test with no threshold, no safe harbour and no exception, and it operates independently of the first. Note also what is absent: unlike Malaysia's Art. 28(1), Thailand's Art. 27 and Saudi Arabia's Art. 26(1), this article contains no express domestic-law saving — no words preserving domestic provisions concerning tax avoidance or evasion. Separately, article 28 ('miscellaneous rules') runs the other way and is A taxpayer-protective provision, not an anti-abuse one: 'The provisions of this Agreement shall not be construed to restrict in any manner any exclusion, exemption, deduction, credit or other allowance now or hereafter accorded either: (a) by the laws of a Contracting State in the determination of the tax imposed by that Contracting State; (b) by any other special arrangement on taxation in connection with the economic or technical co-operation between the contracting states.' Limb (a) is the familiar domestic-law-if-more-beneficial rule; limb (b) preserves tax concessions granted under bilateral economic or technical co-operation arrangements, which no other treaty in this batch mentions. Art. 28(2) allows each competent authority to prescribe regulations to carry out the Agreement.
PPT	There is A purpose test but its threshold is the highest — and therefore the most taxpayer-favourable — in the entire batch, and the difference is A single phrase that is easy to misread. Art. 27, first sentence: a resident is denied benefits 'if its affairs were arranged with the primary purpose to take benefits of this Agreement.' compare the others. Malaysia's Art. 28(2) and Nepal's Art. 28 both say 'the main purpose or one of the main purposes'. The MLI Art. 7(1) PPT, and the Qatari Art. 28 and substituted Sri Lankan Art. 28(6), say 'one of the principal purposes'. Saudi Arabia's Art. 26(2) says 'the main purpose or one of the main purposes of the creation of such enterprise'. Kuwait says 'the primary purpose' — definite article, singular, and 'primary' rather than 'main'. On its face that requires the treaty benefit to have been the dominant purpose of the arrangement, not merely one among several main purposes. A structure with a genuine commercial primary purpose and a substantial but secondary treaty motive is caught by Malaysia, Nepal, Qatar and Sri Lanka, and is not caught by the words used here. Against that, there is no object-and-purpose saving clause of the kind the MLI PPT contains, so a claimant who does fall within the test has no escape. The preamble contains no beps treaty-shopping recital. Whether an MLI PPT now applies is not established by this source; see gaps. If one does, it would lower the threshold materially — from 'the primary purpose' to 'one of the principal purposes' — which would be one of the largest practical changes the MLI could make to any treaty in this batch.
Subject to tax	This is where the india-kuwait agreement is fought, and unlike saudi arabia — where the equivalent provision is buried in the protocol — here IT is in article 4 itself, in A bespoke two-limb definition that differs for each state. Art. 4(1): '(a) in the case of india: any person who, under the laws of the State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State; (b) in the case of kuwait: an individual who is A kuwaiti national or an indian national and who is present in kuwait for A period or periods totalling in the aggregate at least 183 days in the fiscal year concerned, and A company or an entity which is incorporated in kuwait and is liable to tax therein.' four consequences, and every one of them is load-bearing. (i) the indian limb and the kuwaiti limb are different tests. India's is the ordinary liable-to-tax test with a source-only exclusion; Kuwait's is not a liable-to-tax test for individuals at all. (ii) for individuals, kuwaiti residence turns on nationality plus presence, not on tax liability. Kuwait levies no personal income tax, so a liable-to-tax test would defeat every individual claim; the treaty solves that by keying residence to being A kuwaiti national or an indian national present for at least 183 days (so exactly 183 qualifies) in the fiscal year concerned (a fixed year, not a rolling twelve months). (iii) A third-country national resident in kuwait is not A resident of kuwait for treaty purposes at all. The limb names only Kuwaiti and Indian nationals. A British, Egyptian or Filipino expatriate living permanently in Kuwait falls outside Art. 4(1)(b) however long the presence — a striking and easily-missed exclusion, and one that has no counterpart in the Saudi Protocol para 4(b), which is likewise confined to Indian nationals but sits alongside the ordinary liable-to-tax limb rather than replacing it. (iv) for companies and entities the test is cumulative and the second element is A real subject-to-tax condition: 'incorporated in kuwait and is liable to tax therein'. Kuwaiti corporate income tax historically reaches foreign-owned corporate interests rather than wholly Kuwaiti-owned entities, so a Kuwaiti company outside the charge is not a resident and gets no treaty benefit at all — it never reaches Articles 10 to 13. That is the single most likely Indian objection to a Kuwaiti claim, and it is a condition of residence, not merely of relief. Art. 4(2) then sweeps in the sovereign sector on both sides regardless of tax liability: 'a resident of a Contracting State shall include all of the following: (a) the Government of that Contracting State and any political sub-division or local authority thereof; (b) any governmental institution created in that contracting state under public law such as A corporation, central bank, fund, authority, foundation, agency or other similar entity, which is wholly owned and controlled directly by the government of that Contracting State.' The words 'fund', 'authority' and 'corporation' are wide enough to cover a sovereign wealth vehicle, and the qualifying conditions are that it be created under public law and be wholly owned and directly controlled by the Government.
Where this comes from	Article 27 (Limitation of Benefits — two sentences, 'the primary purpose' test plus bona fide business test); Article 28 (Miscellaneous Rules — taxpayer-protective, not anti-abuse); Article 4(1)(a) and 4(1)(b) (the bespoke residence definitions); Article 4(2)(a) and (b) (governmental institutions as residents)

No Synthesised Text for Kuwait has been identified from the sources used here. The notified text carries exactly one amendment marker, at Art. 2(3)(b), traced to Notification No. S.O. 1823(E) dated 4-5-2018 w.e.f. 26-3-2018; there is no MLI-derived provision anywhere in the instrument. There is no beps preamble recital — the preamble recites only the desire to avoid double taxation, prevent fiscal evasion and promote economic co-operation — and no MLI-style principal purposes test. What the Agreement has instead is Article 27, a two-sentence Limitation of Benefits article whose purpose test is drafted to a notably higher threshold than the MLI standard (see anti_abuse.ppt). Whether the MLI in fact modifies this treaty cannot be established from this source and is recorded as a gap.

The protocols, in order

A treaty read without its protocols is a wrong answer.

There is one amendment and IT is narrow in scope but substantive in effect. Notification No. S.O. 1823(E) [No. 21/2018 (F. No. 501/03/88-ftd-II)], dated 4-5-2018, with effect from 26 march 2018 — note that the effective date (26-3-2018) is earlier than the notification date (4-5-2018), so the amendment operates retrospectively to 26 March 2018. IT substituted sub-paragraph (b) of article 2(3) — the list of kuwaiti taxes covered — and nothing else. No rate, threshold, distributive article or anti-abuse provision was touched. Articles 4, 5, 10, 11, 12, 13, 22, 23, 27 and 28 are all as originally notified in 2007.
What the 2018 substitution actually did is A narrowing, not an expansion, and IT is the most practically important fact about this treaty'S current state. Before substitution, Art. 2(3)(b) listed four Kuwaiti taxes: '(1) the corporate Income-tax; (2) the contribution from the net profits of the kuwaiti shareholding companies payable to the kuwait foundation for advancement of science (kfas); (3) the zakat; (4) the tax subjected according to the Supporting of Natioanal Employees law (hereinafter referred to as "Kuwaiti tax").' after substitution it lists three: '(1) the corporate income-tax; (2) the income tax as per law no. 23 of 1961; (3) the tax subjected according to the Supporting of Natioanal Employees law (hereinafter referred to as "Kuwaiti tax").' SO the kfas contribution and the zakat were both removed from the covered taxes, and the income tax under Kuwaiti Law No. 23 of 1961 was added. The contrast with saudi arabia is direct and should be flagged whenever the two gulf treaties are compared: under the India-Saudi Arabia Convention, Zakat is a covered tax under Art. 2(3)(b) and Protocol para 11 expressly provides that 'the Zakat shall be treated as a tax on income'. Under the India-Kuwait Agreement, Zakat was a covered tax and ceased to be one with effect from 26 March 2018. An Indian resident seeking credit under Art. 23 for Kuwaiti Zakat, or for the kfas contribution, has no treaty basis for it in respect of any period from 26 March 2018 onwards. Advice given on the pre-2018 text is wrong for current periods, and advice given on the current text is wrong for periods before 26 March 2018.
The protocol is the original one, signed with the Agreement at New Delhi on 15 June 2006, expressed to 'form as integral part of the said Agreement'. IT has A single unnumbered paragraph and it is an anti-force-of-attraction and offshore-execution provision on Article 7. It provides that PE profits 'shall be determined on the basis of that part of the receipt which is attributable to the actual activity of the permanent establishment for such sales or business'; that 'the sales, business or supplies executed outside the contracting state in which the permanent establishment is situated shall not be taken into consideration in determining the profits of the permanent establishment'; that on contracts for survey, constructions or installations the PE's profits are determined 'only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the State where the permanent establishment is situated'; and — the strongest limb, which the Sri Lankan equivalent does not contain — that 'the profits related to that part of the contract which is carried out by the head office of the enterprise shall be taxable only in the state of which the enterprise is A resident.' That last sentence is an express exclusive-allocation rule for head-office-executed work, not merely an attribution restriction.

The words themselves

Quoted from the treaty as notified.

in the case of Kuwait : an individual who is a Kuwaiti national or an Indian national and who is present in Kuwait for a period or periods totalling in the aggregate at least 183 days in the fiscal year concerned, and a company or an entity which is incorporated in Kuwait and is liable to tax therein.

Article 4, paragraph 1(b) of the treaty as notified.

any governmental institution created in that Contracting State under public law such as a corporation, Central Bank, fund, authority, foundation, agency or other similar entity, which is wholly owned and controlled directly by the Government of that Contracting State.

Article 4, paragraph 2(b) of the treaty as notified.

The furnishing of services, including consultancy or managerial services, by an enterprise of a Contracting State through employees or other personnel engaged by the enterprise for such purpose, in the other Contracting State constitutes a permanent establishment only if activities of that nature continue for a period or periods aggregating 183 days or more within any twelve-month period.

Article 5, paragraph 4 of the treaty as notified.

in so acting, he manufactures or processes in that Contracting State goods and merchandise belonging to the enterprise.

Article 5, paragraph 6(d) of the treaty as notified.

Notwithstanding the provisions of paragraphs 1 and 2, dividends paid by a company which is a resident of a Contracting State shall not be taxable in that Contracting State if the beneficial owner of the dividends is: (a) the Government, a political sub-division or a local authority of the other Contracting State; or (b) the Central Bank of the other Contracting State;

Article 10, paragraph 3 of the treaty as notified.

other governmental agencies or financial institutions as may be specified and agreed to in an exchange of notes between the competent authorities of the Contracting States.

Article 11, paragraph 3(c) of the treaty as notified.

A resident of a Contracting State shall not be entitled to the benefits of this Agreement if its affairs were arranged with the primary purpose to take benefits of this Agreement. The case of legal entities not having bona fide business activities shall be covered by the provisions of this Article.

Article 27, paragraph the entire Article — it has no paragraphs of the treaty as notified.

The provisions of this Agreement shall not be construed to restrict in any manner any exclusion, exemption, deduction, credit or other allowance now or hereafter accorded either: (a) by the laws of a Contracting State in the determination of the tax imposed by that Contracting State; (b) by any other special arrangement on taxation in connection with the economic or technical co-operation between the Contracting States.

Article 28, paragraph 1 of the treaty as notified.

The profits related to that part of the contract, which is carried out by the head office of the enterprise shall be taxable only in the State of which the enterprise is a resident.

Article Protocol, paragraph single unnumbered paragraph of the treaty as notified.

The tax payable in the Contracting State mentioned in paragraph 2 of this Article shall be deemed to include the tax which would have been payable but for the tax incentives granted under the laws of the Contracting State and which are designed to promote economic development.

Article 23, paragraph 3 of the treaty as notified.

What to watch

Residence is the first and usually the decisive question on this treaty, and article 4 is bespoke. A Kuwaiti company must be incorporated in kuwait and liable to tax therein — a cumulative test, and the second element is a genuine subject-to-tax condition. A Kuwaiti entity outside the charge to Kuwaiti tax is not a resident and gets nothing. A Kuwaiti individual is a resident on nationality plus 183 days' presence, with no tax-liability requirement at all.
And A third-country national living in kuwait is not A kuwaiti resident under this treaty. Art. 4(1)(b) names only 'a Kuwaiti national or an Indian national'. Expatriates of any other nationality are outside the definition however long they have lived there. No other treaty in this batch draws the line by nationality in this way.
The 2018 amendment removed zakat and the kfas contribution from the covered taxes, with effect from 26 march 2018. Notification No. S.O. 1823(E) [No. 21/2018] dated 4-5-2018 substituted Art. 2(3)(b). Before it, the covered Kuwaiti taxes were the corporate income-tax, the kfas contribution, the Zakat and the National Employees support tax; now they are the corporate income-tax, the income tax under Law No. 23 of 1961, and the National Employees support tax. There is therefore no treaty credit for Kuwaiti Zakat or the kfas contribution for periods from 26 March 2018. Note the direct contrast with Saudi Arabia, where Zakat remains a covered tax and its Protocol expressly treats it as a tax on income.
Article 12 is headed 'royalties' but IT contains the FTS article. Every operative paragraph reads 'royalties or fees for technical services', and Art. 12(3)(b) is a full FTS definition at the same 10 per cent rate. A scan of the article headings — where the entry reads simply 'article 12 royalties' — will wrongly suggest this treaty has no FTS article, as Thailand, Nepal, Bangladesh and Saudi Arabia genuinely do not.
The FTS definition has no make-available limb. Art. 12(3)(b) is the broad managerial-technical-consultancy formula, word-for-word the Sri Lankan text. Managerial services are inside it and nothing turns on transmission of know-how to the payer.
The service PE clause is not confined to the same or A connected project, and that is the biggest single difference from its neighbours. Art. 5(4) aggregates all service days of the enterprise's personnel in the other State over any rolling twelve months. Malaysia, Thailand, Sri Lanka, Nepal, Saudi Arabia and Qatar all confine aggregation to the same or a connected project. Several unrelated short engagements that stay safe elsewhere combine here.
Both PE thresholds are '183 days or more', not 'more than 183 days'. Art. 5(3) for construction and Art. 5(4) for services. The 183rd day itself creates the permanent establishment. Every other treaty in this batch uses a 'more than' formulation under which the threshold day is the last safe day.
There is A fourth agency PE limb for manufacturing or processing. Art. 5(6)(d): a dependent person who 'in so acting, manufactures or processes in that Contracting State goods and merchandise belonging to the enterprise' creates a PE. Contract manufacturing and toll processing arrangements need checking against this limb; no other treaty in this batch has it.
The insurance PE has no re-insurance carve-out — the same omission as the Saudi treaty, and unlike Malaysia, Thailand, Sri Lanka, Nepal and Qatar.
The article 5(5) exclusion list is in the old, wide form and expressly covers delivery. Sub-paragraphs (a) and (b) exclude facilities and stock used for 'storage, display or delivery'. A delivery warehouse is outside the PE definition here in a way it would not be under a post-beps Article 5.
The limitation of benefits threshold is 'the primary purpose' — the highest bar in the batch. Art. 27 denies benefits only where affairs were arranged with the primary purpose of obtaining them. That is materially harder for the revenue to establish than 'one of the main purposes' (Malaysia, Nepal) or 'one of the principal purposes' (Qatar, Sri Lanka as substituted, and the MLI). Do not paraphrase it as a principal purposes test.
Article 28 is A taxpayer-protective article, not an anti-abuse one, despite its position. 'Miscellaneous Rules' preserves any exclusion, exemption, deduction, credit or allowance accorded by domestic law or 'by any other special arrangement on taxation in connection with the economic or technical co-operation between the Contracting States'. That second limb has no counterpart elsewhere in this batch.
The protocol is one paragraph long and IT is the strongest offshore-execution clause in the batch after saudi arabia'S. It confines PE profits to the PE's actual activity, excludes sales, business or supplies executed outside that State, confines survey, construction and installation profits to the part effectively carried out by the PE, and then goes further than the Sri Lankan equivalent by providing that profits on the head-office-executed part 'shall be taxable only in the state of which the enterprise is A resident'.
Art. 11(3) says 'interest paid by A company'. The words appear to have been copied from the dividend article. Read literally, interest paid by a non-corporate payer to the other State or its central bank falls outside the exemption. Flag the point rather than assuming it away.
Art. 11(3)(c) is textually wider than art. 10(3)(c). The dividend article allows the competent authorities to add 'governmental agencies or governmental financial institutions'; the interest article says 'governmental agencies or financial institutions'. Neither is self-executing — both require an exchange of notes.
Other income is residence-only. Article 22 has two paragraphs and no source-taxation override. Anything outside Articles 6 to 21 — including late-payment penalty charges expelled from Article 11 — is taxable only in the recipient's State of residence. This matches Saudi Arabia and differs from Malaysia, Thailand, Sri Lanka and Qatar.
Tax sparing is open-ended and reciprocal. Art. 23(3) deems tax payable to include 'the tax which would have been payable but for the tax incentives granted under the laws of the Contracting State and which are designed to promote economic development' — no list of qualifying provisions, no percentage cap, no sunset and no review clause. The wording is identical to the Qatar treaty's Art. 23(4).
The article 5(6)(a) cross-reference points at the wrong paragraph. It excludes an agent whose activities are limited to those mentioned in 'paragraph 4', but on this treaty paragraph 4 is the service PE paragraph; the preparatory-and-auxiliary list is paragraph 5. The standard layout puts the exclusion list at paragraph 4, and the reference appears not to have been renumbered when the construction and service limbs were split into separate paragraphs.

What this page does not tell you. Whether the MLI modifies this treaty is not established. No Synthesised Text for Kuwait has been identified from the sources used here, and the notified text carries only the single 2018 amendment marker at Art. 2(3)(b). The question matters more here than on most treaties in this batch because Art. 27's threshold is 'the primary purpose': an MLI Art. 7(1) principal purposes test would replace or supplement it with a materially lower 'one of the principal purposes' standard, which would be one of the largest practical changes the MLI could make to any treaty in this sweep. Nothing in this source confirms or denies it. The 2018 amending instrument itself was not read. Its number, date and effective date (S.O. 1823(E) / No. 21/2018 dated 4-5-2018, w.e.f. 26-3-2018) and the pre- and post-substitution text of Art. 2(3)(b) are established. What was not established is whether it gave effect to a separate amending protocol signed between the two States (the 26 March 2018 effective date suggests an instrument entering into force on that day), whether it made any other change, and what transitional rules it lays down for periods straddling 26 March 2018. Why zakat and the kfas contribution were removed from the covered taxes, and whether any credit for them survives by another route (for example under Art. 28(1)(a) as a domestic-law allowance), is not addressed anywhere in the instrument and is not established here. 'principally' in Art. 13(4) is not defined anywhere in the Agreement or the single-paragraph Protocol, and no percentage, testing date or look-back period is supplied. The threshold is undetermined on the face of the instrument. No exchange of notes specifying additional governmental agencies or financial institutions under Art. 10(3)(c) or Art. 11(3)(c) was found, and none is reproduced in this record. Both lists may be empty — which would leave the Kuwait Investment Authority reliant on Art. 4(2)(b) for residence and on the Government limb of Art. 10(3)(a) and 11(3)(a) for exemption, rather than on any named designation. The art. 11(3) defect ('interest paid by a company') was not resolved. Whether it has been corrected by corrigendum, or read purposively by either revenue, is not established. The art. 5(6)(a) cross-reference to 'paragraph 4' appears to be a renumbering error. Whether it has been corrected or is applied as if it referred to paragraph 5 is not established. How art. 4(1)(b)'s nationality-based individual residence test interacts with the tie-breaker in art. 4(3) is not addressed. An Indian national resident in India under Indian law and present in Kuwait for 183 days is a resident of both States under Art. 4(1), but Art. 4(3)(c) breaks the tie by nationality — which would point back to India in every such case. No guidance on the point was found. Articles 24 (Non-Discrimination), 25 (Mutual Agreement Procedure) and 26 (Exchange of Information) were not read in full for this record; only their presence was confirmed. The Agreement has no assistance-in-collection article and no Protocol paragraph contemplating one — unlike the Thai and Saudi treaties, both of which carry a third-State-triggered consultation clause. The exact date of receipt of each of the two Article 30(1) notifications is not stated; only the resulting entry-into-force date of 17 October 2007 is recorded.

The India–Kuwait tax treaty