Business entities in Kuwait
100% foreign ownership is strictly restricted under Kuwaiti law and requires approval from the Investment Promotion Authority. For this reason, most of our Clients prefer to register a joint venture with a professional passive nominee shareholder provided by our Firm. A simpler and less costly alternative is also to operate through an agency agreement. In any case, Healy Consultants will be pleased to discuss your business needs and recommend the most optimum solution.
For more details regarding these options, refer to the page below.
Doing business in Kuwait with a local entity
The Kuwait joint venture (WLL in joint venture)
- A limited liability company (locally known as a WLL) is the simplest business entity recognized under the Kuwaiti law. However, foreign shareholding in a typical LLC is restricted to 49%. It is mandatory to appoint at least one director, who can be of any nationality;
- The minimum paid up capital of such type of entity starts at US$3,300 but also varies significantly as per the exact operations to be conducted by the company. Healy Consultants will prepare a business plan for Government review and will confirm you the recommended amount of capital to timely ensure company registration approval;
- Best uses: the Kuwait joint venture company is the type of entity most commonly setup by foreigners willing to do business in Kuwait. It can be used for various trading and manufacturing business activities.
The wholly foreign-owned Kuwait Limited Liability Company (Wholly foreign-owned WLL)
- Under the FDI Law of 2013, it is possible to setup a 100% foreign owned LLC, after approval from the Kuwaiti Investment Promotion Agency (KDIPA). To obtain such approval, our Clients will submit a concept paper highlighting i) their business model ii) capital investment and iii) potential benefits to Kuwaiti economy;
- The required paid-up capital for KDIPA approval varies according to the expected nature and size of the business of the company. Our Firm recommends our Client to budget a minimum paid up capital of US$25,000, payable to the local corporate bank account of the company before its registration. Our Clients will also be required to appoint one director, who can however be a foreigner and is not required to live in Kuwait;
- All companies registered in Kuwait are required to submit annual tax returns and audited financial statements. However, wholly foreign owned limited liability companies can benefit from a corporate income tax waiver granted by KDIPA during the registration process;
- Best uses: registering a wholly foreign owned entity in Kuwait is challenging due to the requirement to secure Government approval. We consequently recommend this entity only to Clients planning to hire a significant number of employees in Kuwait, or expecting to proceed with technology transfers over the months following business setup in Kuwait.
The Kuwait limited liability partnership (LLP)
- While foreigners can register a limited liability partnership in Kuwait, the authorities will require for at least one of the partners to be a citizen (unless KDIPA approval is granted). The partnership is a tax transparent entity, meaning that earnings are deemed automatically distributed to the partners and must be included in their personal/corporate income tax statements. Financial statements must however be prepared by the partnership:
- Best uses: the LLP is a good entity for our Clients who already have a partner in Kuwait.
The Kuwait free zone company (Shuwaikh companies)
- While Kuwait has created in 1998 one special economic zone for export oriented businesses in Shuwaikh, the Government has put on hold all new applications for registration of businesses. Registration of such entity is hence currently not possible;
- Best uses: such option is currently unavailable in Kuwait.
The Kuwait joint stock company (shareholding company)
- A Joint Stock Company (JSC) may either be closed (subscribed by the company’s incorporators only) or open (subscribed by the public as well). In any case, the total shareholding by foreigners may not exceed 49% unless a waiver is granted following a successful KDIPA application. The JSC must also appoint a board of directors comprising at least 3 members;
- Every JSC will be registered with the Ministry of Commerce and Industry. However, in case of an open JSC, an Amiri decree must also be issued before the company can be setup. It is also mandatory for a JSC to submit annual tax returns and audited financial statements.
- Best uses: such business entity is usually used for larger projects which will be financed by raising capital with third party investors. Such entity is also fit for IPO plans as an open JSC can be listed on the local stock exchange.
Doing business in Kuwait with a foreign entity
The Kuwait branch office
- Foreign companies are allowed to register branches in Kuwait only if i) they are a company incorporated in another Gulf Cooperation Council and owned by GCC nationals or ii) with approval from the Kuwaiti Investment Promotion Agency (KDIPA) for a submitted concept paper highlighting their business model, capital investment and potential benefits to the local economy;
- Unlike GCC branches, the non-GCC company branch must file annual tax returns and audited financial statements. However, the non-GCC company branch can be corporate tax exempt for the first 10 years;
- Best uses: registering a branch can be a strategy to ease the setup process in regulated industries subject to licensing requirements, such as banking, insurance and finance. Otherwise, we recommend our Clients to register a subsidiary instead of a branch.
The Kuwait representative office
- The Kuwaiti FDI Law 2013 also allows foreign companies to register representative offices in the country. These entities will not engage in any income generating activities; instead they will only seek to promote the parent company’s interests in Kuwait. As in case of other FDI entities, prior approval from the KDIPA is mandatory. Furthermore, an authorized manager, who must be resident in Kuwait, must also be appointed.
- Best uses: due to the requirement to obtain Government approval before registering a representative office, it makes more sense to register a subsidiary which will not trade in Kuwait.
Doing business in Kuwait with a foreign entity
- Our Clients who do not i) wish to appoint Kuwaiti shareholders or ii) invest substantial capital amount may choose to work with a commercial agent. Under this option, there is no requirement to setup a new company;
- Our Clients will sign an agreement with the commercial agent, which will be registered with the Ministry of Commerce and Industry. Thereafter, the agent will be responsible for representing our Client’s company in Kuwait;
- Our Clients (working through an agent) will be required to file annual tax returns and pay corporate income tax on their Kuwaiti income;
- See this page for further details on how Healy Consultants can assist your Firm to sign a quality agency agreement in Kuwait with a professional agent or distributor.
Comparison of business entity types in Kuwait
|Operations and logistics||Joint venture||Wholly foreign Owned LLC||Free zone company||LLP||PLC||Branch||RO|
|Doing business in Kuwait permitted?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Allowed to sign contracts with local Clients?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Allowed to invoice local Clients?||Yes||Yes||No||Yes||Yes||Yes||No|
|Can rent local office premises?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Allowed to import raw materials?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Allowed to export goods?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Accounting and tax|
|Corporate tax rate?||15%||0% or 15%||0%||0%||15%||0% or 15%||0%|
|Corporate bank account?||HSBC Kuwait||Citibank Kuwait||Gulf Bank Kuwait||NBK||Citibank Kuwait||HSBC Kuwait||HSBC Kuwait|
|Statutory audit required?||No||Yes||Yes||No||Yes||Yes||Yes|
|Annual tax return to be submitted?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Access to DTAAs?||Yes||Yes||Yes||No||Yes||Yes||No|
|Issued capital required?||US$3,300||US$3,300||US$3,300||US$3,300||US$3,300||None||None|
|Resident director required?||No||No||No||Yes||No||Yes||Yes|
|Resident bank signatory required||No||No||No||No||No||No||No|
|KDIPA approval required before registration?||No||Yes||No||No||No||Yes||Yes|
|local shareholder required?||Yes (51%)||No||No||Yes (51%)||No||No||No|
|Minimum number of directors?||1||1||1||2||3||1||1|
|Minimum number of shareholders?||1||1||1||2||5||Parent company||Parent company|
|Individual shareholders allowed?||Yes||Yes||Yes||Yes||Yes||No||No|
|Corporate director(s) allowed||Yes||Yes||Yes||No||Yes||No||No|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Public register of shareholders and directors||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Can the entity hire expatriate staff?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|How long to get work permit approved?||3 months||3 months||3 months||3 months||3 months||3 months||3 months|
|Fees and timelines|
|How long to set the entity up?||4 months||5 months||5 months||5 months||5 months||4 months||4 months|
|How long to open corporate bank account?||1 month||1 month||1 month||1 month||1 month||1 month||1 month|
|Estimate of engagement costs||US$47,715||US$47,715||US$48,665||US$37,455||US$47,715||US$43,875||US$44,825|
Frequently asked questions
- Will there be restrictions in ownership if foreigners setup a Kuwait company?
Yes. if you wish to setup your business in Kuwait, you will need a local individual to hold either 51% or 100% of the shares.
- Will I be required to get a full audit if I setup a small business in Kuwait?
Yes. If you setup a company in Kuwait, you will required to get an annual audit after Kuwait company setup.
- What are the tax implications for a Kuwait business setup?
Starting a business in Kuwait (with 51% local shareholding) requires corporate tax be paid at 15%. However, if the shareholding is increased to 100%, the company will be completely corporate tax exempt after Kuwait company setup.