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Doing Business in Kuwait

What is the Environment of Business in Kuwait?

Kuwait’s economy is heavily reliant on oil profits.

The following is a snapshot of Kuwait’s major economic indicators:

 GDP KD 39.4 Billion (2019)
 GDP – a real growth rate 0.4% (2019)
Average Oil Production2.739 MMbbl/d(2019)
Value of Total ExportsKD 19.7 Billion(2019)
Value of Total ImportsKD 8.94 Billion(2019)
Annual Inflation Rate1.1%(2019)
Currency (code)The Kuwaiti Dinar (KWD) 

Kuwait’s legal framework for business activity offers a diverse range of business prospects. The Companies Law No. 1 of 2016, as modified, Law No. 116 of 2013 on the Promotion of Direct Investment in the State of Kuwait, and Law No. 36 of 1964 regulating Commercial Agencies are among the laws that govern Kuwait’s corporate climate.

In Kuwait, there are three main avenues for investment:

The geographical location of the State has promoted it to be an ideal niche for business from its inception. Kuwait welcomes international companies to conduct business in the country.

Business visas are available from the Ministry of Information and require a copy of the applicant’s passport as well as an official signature from the company.

Non-Kuwaiti people and offshore companies are not permitted to start any business-related activities in Kuwait, as the Ministry of Information only issues commercial licenses to Kuwait nationals or agents (who own at least 51 percent of the company).

Foreign entities may start a business in Kuwait by forming and investing in a Limited Liability Company (WLL), a Closed Joint Stock Company (KSC Closed), or a Public Joint Stock Company, according to Kuwaiti law. The entity must enter into a transparent contract with a Kuwaiti agent throughout the formation process, which does not involve any formal formalities. Both the agent and the salesperson must be Kuwaiti nationals in order to commercialize the business.

However, in recent years, in an effort to attract more foreign investors, the government has allowed up to 100 percent foreign ownership in certain approved sectors, with these companies required to invest in accordance with Law No. (8) on Regulating Foreign Capital Direct Investment, which was passed in 2001.

Though Kuwaiti nationals, expatriates, and firms are exempt from paying taxes, foreign corporations must pay an income tax of up to 15% of their earnings.

What is the Legal Framework for Doing Business in Kuwait?

What is the Best Way to Do Business in Kuwait?

A person or entity can enter the Kuwaiti market and conduct business via forming a company, entering into a joint venture agreement, appointing a local commercial agent, or appointing a commercial representative.

By forming a Limited Liability Company (or “WLL”), you can protect your assets.

One of Kuwait’s most common corporate entities is the limited liability corporation (WLL).

Kuwaiti nationals are required to own 51 percent of a WLL’s stock (corporate entity or individual).  Except for banking and insurance, a WLL must have at least two shareholders and can operate in any industry. It’s also against the law to invest money on behalf of others. The minimum share investment in a WLL is KD 1,000, but this varies depending on the company’s activity.

By forming a Joint Stock Company (KSC/JSC), you can:

Kuwaiti citizenship is required for a shareholding (joint-stock) corporation (KSC). KSC shares can be traded freely.

A Joint Stock Company can be closed (i.e., its shares are not listed on the Kuwait Stock Exchange) or open (i.e., its shares are listed on the Kuwait Stock Exchange). An Amiri order must also be given in the case of an open Kuwait Joint Stock Company before it may be formed. Unless the company is licensed under the Foreign Direct Investment Act, foreign investors cannot own more than 49 percent of the company’s shares (FDI).  This option is ideal for large projects that will be financed through the use of third-party investors.

Because an open JSC can be registered on the Kuwait Stock Exchange, it can also be used for Initial Public Offering (IPO) plans (KSE).  Joint-stock companies (JSCs) must have a minimum of 5 shareholders, and in the case of public JSCs, the founders are required by law to subscribe to a minimum of 10% of the capital. Closed joint-stock corporations do not accept public subscriptions for their shares, instead relying on an official document signed by the founders.

For the purpose of a certain contract, foreign contractors working on big projects in Kuwait frequently form a joint endeavor. A joint venture normally conducts business with the help of its individual partners. Unless the firm deals with the third party as a company, transactions with third parties under the JV are not binding on the other JV members. In this situation, whether or not the partners were directly involved in the transactions, they are liable. If a non-Kuwaiti partner wishes to do business on behalf of the Kuwaiti JV, consent from the Kuwaiti collaborator is required.

How I can Establish a Kuwait Joint Ventures (KJV) Business?

How do I go about Establishing Partnerships in Kuwait?

Kuwait’s Commercial Companies Laws recognize two forms of partnerships:

  1. A general partnership: is a group of two or more people who are jointly liable for the partnership’s debts up to the extent of their personal wealth.
  2. Limited partnership: Has two types of partners: unlimited liability general partners and limited liability limited partners. These types of partnerships take the shape of a separate legal entity that can conduct business under its own name.