Accounting and tax
Healy Consultants will be happy to efficiently and effectively discharge your annual company accounting and tax obligations. For an active trading company, the estimate of these fee amounts to US$9,750. Following receipt of a set of draft accounting numbers from your company, Healy Consultants will more accurately advise accounting and tax fees. For a dormant company, Healy Consultants fees are only US$950;
- Corporate tax in Kuwait is levied at 15%. However some companies are offered tax holiday for up to 10 years under the Foreign Direct Investment Law;
- Kuwait is exempt of taxes including: i) personal taxation ii) interest iii) royalties iv) VAT v) stamp and transfer duties and vi) property taxes;
- Losses may be carried forward for up to three years and cannot be carried back;
- Capital gains are treated as business profit and suffer 15% corporate tax;
- Dividends, paid to nonresidents suffer 15% withholding tax, unless the rate is reduced under double taxation treaty (DTA). Kuwait has signed 40 DTA’s;
- There is no thin capitalization requirements on both resident and non-resident companies;
- Tax returns must be filed within three and a half months from the end of the tax year. Late payments result in a monthly penalties of 1% of the tax payable;
- Statutory Reserve of 10% of profits must be retained by local companies;
- Social security payments of 11.5% and 8% are due by both employer and employee, respectively;
- In November 2007, the Kuwait National Assembly approved Law No. 46 of 2006 providing that all public and closed joint stock companies in Kuwait, with the exception of government and foreign companies, must pay a one percent (1%) religious tax called Zakat (“Zakat”);
- GCC entities are treated as Kuwaiti entities for tax purposes;
- There are no foreign exchange or other currency controls;
- If required, Healy Consultants will assist the Client with: i) Documenting and implementing accounting procedures ii) Implementing financial accounting software iii) Preparing financial accounting records iv) Preparing forecasts, budgets, sensitivity analysis and other services;
- It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.
Legal and compliance
- A typical Kuwaiti LLC can be setup with 1 director and 2 shareholders. At least 1 director must be GCC/Kuwaiti resident. Furthermore, a foreign shareholder may not hold more than 49% stake in the company;
- A Kuwaiti JSC will require at least 3 directors and 5 shareholders. Like an LLC, a JSC will have 1 resident director and 49% ownership limit for foreigners. A JSC may or may not be listed on the Kuwaiti stock exchange;
- To issue JSC shares to the Kuwaiti public, our Client will need to approval from the Kuwaiti Capital Markets Authority (CMA). Furthermore, an Amiri decree will need to be issued. Lastly, our Client will be required to hold at least 10% stake in the company;
- Our non-Kuwaiti Clients who wish to register 100% foreign owned LLCs, branch offices and representative offices must secure approval from the Kuwaiti Investment Promotion Agency (KDIPA). These entities may only be formed for FDI purposes;
- All entities (including branches and representative offices) will i) appoint 1 resident director/manager and 1 auditor and ii) present a signed lease agreement to the Ministry of Commerce and Industry (MOCI) at registration;
- The minimum share capital for company formation in Kuwait varies in accordance with the business activity. For a simple company, the minimum statutory capital requirement is US$33,000 (KD10,000);
- Our Clients concluding an agreement with a Kuwaiti commercial agent will be required to register the agreement with the MOCI. Thereafter, the agent may represent the company’s interests in Kuwait.
- Employees can be hired in Kuwait on either i) an indefinite term contract or ii) a fixed term contract. The maximum probation period for employees can be as long as 100 days;
- In Kuwait, employees may not work longer than 48 hours a week. During the month of Ramadan, the maximum weekly hours may not be longer than 36 hours. Weekends will be observed on Fridays and Saturdays;
- Employees (having served at least 9 months) are entitled to 30 days of paid annual leave every year. Employees will also be granted 15 days of paid medical leave, which will be incumbent on producing a valid medical certificate;
- All Kuwaiti employers must contribute 11.5% of the employee’s salary to the Public Institution for Social Securities. The employee’s contribution will be 8% of the salary. Furthermore, employers will be required to provide insurance coverage in case of work related injuries;
- Employees hired on indefinite contracts may terminate the employment after a notice period of 3 months. However, employees on fixed term contracts will be required to serve the complete period.
- All Kuwaiti companies will file tax returns and audited annual financial statements to the Ministry of Finance. Furthermore, companies will also be required to submit an annual return to MOCI. Following documents may also be requested by the authorities: i) stock record ii) inventory sheets iii) ledger iv) journal and v) expenses analysis sheets;
- All JSCs will pay 1% of their annual profits to the Kuwaiti Foundation for Advancement of Science. Furthermore, another 1% must be contributed as Zakat to the state budget;
- All companies will be required to withhold 5% of the contract value from a contractor/sub-contractor until the latter can produce a statement from the authorities proving all tax liabilities have been settled.