Benefits and problems

Benefits and problems of registering a company in Kuwait

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  • Benefits and problems

    Benefits of Kuwait company registration

    Kuwait business registration advantage

    1. It is easy for MNCs to start business operations in Kuwait because:
      • Our Clients may simply sign an agreement with a local commercial agent and register it with the Ministry of Commerce and Industry, instead of spending 5 months in registering a new LLC in Kuwait. Thereafter, the agent will be responsible for the Client’s business activities in Kuwait;
      • Healy Consultants recommends our Clients to proceed with an agency agreement as it i) negates the need to appoint a 51% local shareholder and ii) deposit excessive capital into the company bank account.

    2. Our Clients conducting business in Kuwait will likely enjoy the following benefits:
      • Kuwait is a key member of the Organization of the Petroleum Exporting Countries (OPEC). Oil accounts for around 50% of Kuwait’s gross domestic product (GDP). Many investors choose to register a company in Kuwait to tap opportunities into the booming oil sector;
      • Kuwait has a reputation for being one of the politically stable and relatively efficient countries in the Middle East. Furthermore, its transparent government structure makes it a relatively better place to conduct business;
      • While Arabic is the official language of Kuwait, English is still widely spoken. It is used during business negotiations and is the compulsory second language in schools. Therefore, foreign investors find it easier communicating with employees, customers and suppliers;
      • Kuwait does not impose several taxes including: i) personal tax ii) withholding tax on interest and royalties iii) Value added tax (VAT) iv) stamp and transfer duties and v) property taxes.


    Problems with Kuwait company registration

    1. It is outrageously expensive to start a business in Kuwait because:
      • Prior to commencing the registration process, Healy Consultants recommends our Client to budget at least US$110,000 excluding the paid-up share capital;
      • During the registration process, the authorities frequently request documents to be attested by the Kuwaiti Embassy in the country of origin of our Client. This is both a costly and time consuming exercise;
      • Kuwaiti law requires a citizen to hold at least 51% stake in the company. Most of our Clients request Healy Consultants to be the resident shareholder. Healy Consultants resident shareholder service fee amounts to US$50,500 per annum;
      • Even though a large number of people speak English, business documents are written in Arabic. Therefore, foreign investors will need to bear translation costs.

    2. Our Clients will also face negative consequences due to following issues:
      • Only after 6 months from engagement commencement, our Clients’ should expect to issue their first sales invoices and sign contracts! The Kuwait Government takes very long to review and approve foreign company registration;
      • All Kuwaiti companies must secure a license before they can commence their business operations. Examples of licenses include commercial license, trading license and general trading license;
      • Our Client’s business in Kuwait may suffer due to inconsistent regulations and slow moving bureaucracy. Kuwait is negatively ranked as the 55th least corrupt country in the world, according to the 2015 Corruption Perceptions Index by Transparency International;
      • Kuwait is ranked as the world’s 74th freest economy by the Heritage Foundation’s 2016 Index of Economic Freedom, a measure of freedom enjoyed in business, trade, monetary, financial, investment, and labour markets;
      • Kuwait is negatively ranked as 101st out of 189 jurisdictions with regards to “ease of doing business” by the World Bank in their annual Doing Business survey;
      • Kuwait is ranked as the world’s 39th most competitive economy in the World Economic Forum’s Global Competitiveness Report 2016 – 2017;

  • Best uses for a Kuwaiti company

    1. Kuwait is an attractive jurisdiction for GCC entrepreneurs because:
      • Kuwait is an active member of the Gulf Cooperation Council (GCC). Consequently, it provides an excellent gateway into the neighbouring GCC countries and Iraq;
      • GCC owned businesses in the country are exempt from the 15% corporate tax, and the country receives 35% of intra-GCC foreign direct investment.

    2. The Kuwaiti Government has recently launched investment programs into the transportation, health care and infrastructure (housing and free zone) sectors. This offers excellent opportunities for our Clients who may wish to setup companies in these sectors and take advantage of the government assistance.