Benefits and problems of registering a company in Kuwait
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Benefits and problems
Benefits of Kuwait company registration
- The fastest way to start business in Kuwait is through a Commercial Agency. The majority of multinationals invest in Kuwait in this way. Consequently, there is no need to register a Kuwaiti LLC;
- Some businessmen and contractors also proceed with business registration in Kuwait because the country provides an ideal gateway into the neighbouring GCC countries and Iraq;
- 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;
- 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;
- Without our Client travelling, Healy Consultants will assist with corporate bank account opening with one of the world’s leading retail banks, including HSBC and Citibank in either Kuwait or internationally to support the Kuwaiti company.
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 do the business.
Kuwait is exempt of taxes including: i) personal taxation ii) interest iii) royalties iv) VAT v) stamp and transfer duties and vi) property taxes.
Problems with Kuwait company registration
- It is outrageously expensive to start a business in Kuwait. Our Clients’ should budget at least US$110,000 excluding the paid up share capital;
- In accordance with Article 191 of the Companies Law, the share of the Kuwaiti citizen in a WLL must be at least 51%. 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;
- Only after 7 months from engagement, 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 documents required for the company registration must be notarized and attested at the Kuwait Embassy in the Client’s country;
- Business registration in Kuwait is challenging because of 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, a global measure of corruption amongst public officials and politicians;
- The minimum capital requirement for business registration is 1,000 Kuwait Dinars (US$3,500);
- 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;
- According to the 2015 Doing Business Survey by the World Bank, Kuwait is ranked 101 out of 189 economies on the ease of doing business. The survey measures factors including business start-up procedures, time, cost, and minimum capital required to start a business;
- Kuwait is ranked as the world’s 40th most competitive economy in the World Economic Forum’s Global Competitiveness Report 2014 – 2015;
- During company registration and corporate bank account opening, the Kuwaiti Government frequently requests 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 and complicates the company incorporation process. Examples of documents include i) passports copies of directors ii) parent company certificate of incorporation and M&AA iii) power of attorney issued by the parent company iv) Bank reference letter and proof of address of directors. To overcome this problem, our Clients’ appoint Mr. Aidan Healy as the temporary nominee shareholder, director and bank signatory.
Though a large number of people speak English, business documents are written in Arabic, therefore foreign investors have to face the translation costs.
Best uses for a Kuwaiti company
A new market for GCC investors
If your business operates elsewhere in the Middle East and is wholly-owned by individuals from GCC states like Bahrain, the UAE, Saudi Arabia, Kuwait or Qatar, expanding to Kuwait is a good option. GCC-owned businesses in the country are exempt from the 15% corporate tax, and the country receives 35% of intra-GCC foreign direct investment.