I always thought that it was a Kiddush Hashem to be nice to non-Jews because it would reveal that Jews are kind, and that Klal Yisrael is full of wonderful people. But does it halachically count as a Kiddush Hashem to be kind to a gentile?
The Rambam (Hilchot Gezelah va'Avedah 11:3) writes that it is forbidden to return a lost item to an idol worshiper (Sanhedrin 76b). Nevertheless, the Rambam adds: If he returns it in order to bring about a Kiddush Hashem, by causing the gentile to praise the Jewish people for their faith, then doing so is praiseworthy. (See also Choshen Mishpat 266:1.)
This can be learned from a story brought down in the Yerushalmi (Bava Metzia 2:5) and Midrash Rabbah (Devarim 3:3) about Rabbi Shimon Ben Shatach, who returned a precious stone that he discovered on the neck of the donkey which he bought from a Gentile, thereby causing him to exclaim: “Blessed be Hashem, the G-d of Shimon Ben Shatach!”. The Yerushalmi concludes that the reason why he returned it was just in order to hear those words.