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. Kuwait has published a highly ambitious economic development plan called New Kuwait Vision 2035 to boost foreign investment, support private sector growth and grow the non-oil economy. For foreign investors, this pro-business blueprint could translate into new opportunities in finance, trade and IT sectors;
    2. Kuwait has a stable and robust financial system, with a well-developed regulatory and supervisory framework. Consequently, companies operating in Kuwait have access to world-class banking and finance facilities and services;
    3. Oil exports account for almost half of Kuwait’s gross domestic product (GDP). Many foreign investors establish Kuwait businesses to serve the country’s oil and gas sector;
    4. Kuwait is the world’s fourth-richest country on a per capita GDP basis. Consequently, there is a strong domestic consumer market;
    5. Although Arabic is the official language, English is widely used in Kuwait’s business community, including i) dealing with government departments ii) during negotiations and iii) when communicating with customers, suppliers and employees;
    6. The Kuwaiti dinar (KD) is the world’s highest value currency. Receiving income in KD offers significant exchange rate advantages;
    7. Kuwait imposes no i) personal tax ii) withholding tax on interest and royalties iii) value added tax (VAT) iv) stamp and transfer duties or v) property taxes;
    8. To encourage foreign investment, the Kuwait Direct Investment Promotion Authority (KDIPA) offers a range of incentives including i) exemption from corporate income tax or any other tax for up to 10 years ii) removal of import duties for certain goods and iii) land grants;
    9. Foreign investors can take 100% ownership of a Kuwaiti company operating in sectors such as infrastructure, insurance, hospitals, housing, tourism and entertainment;
    10. Multinational corporations are advised to sign agency agreements in Kuwait to begin operating quickly. Healy Consultants Group can assist our Clients sign a simple agreement with a local commercial agent and register it with the Ministry of Commerce and Industry. Thereafter, the agent will distribute/render services on behalf of the Client’s business;
    11. Kuwait is attractive to manufacturers and trading companies due to its strategic location in the northern Gulf, close to the Gulf Co-operation Council (GCC) states, as well as the economies of Iraq, Iran, Turkey, Eastern Asia and southern Europe.

    Problems with Kuwait company registration

    1. Starting a business in Kuwait is expensive because:
      • A Kuwait LLC has a minimum capital requirement of KD1,000;
      • Kuwaiti authorities routinely request foreign investor documents to be attested by the Kuwaiti embassy in the investor’s country of origin;
      • Official documentation in Kuwait is in Arabic, so foreign investors will need to factor in translation (and notarsation) costs.
    2. Under commercial law, a Kuwaiti national must hold at least a 51% share in a local business (although the Foreign Investment Law makes exceptions). To fulfil this regulatory requirement, Healy Consultants Group can provide a local ‘sponsor’ service for our Clients. The typical fee for this service is US$50,500 per annum;
    3. Compared to other Middle East countries, Kuwait ranks poorly in terms of the ease of doing business, including in areas such as i) getting credit ii) trading across borders and iii) resolving insolvency. Tendering processes also sometimes lack transparency. As a result, many foreign investors favour partnerships with local firms to gain market entry;
    4. All Kuwaiti companies must secure a license before they can commence operations. Examples include i) commercial license ii) trading license and iii) general trading license;
    5. Due to the complexities of Kuwait business setup and licensing, our Clients should allow for a minimum of 6 months from engagement start before issuing sales invoices and signing contracts;
    6. Kuwait is prone to regional geopolitical instability, which erodes foreign investor confidence. Furthermore, a number of major projects in Kuwait have been delayed or cancelled in the last two decades as a result of domestic political instability;
    7. The 2019 closure of Kuwait’s only free zone is another example of the economic, political and strategic instability in the country;
    8. Kuwait is negatively ranked as the world’s 85th most corrupt country. Foreign investors should be aware that the concept of wasta, or favouritism, is part of everyday business life in Kuwait;
    9. Kuwait is ranked the world’s 90th freest economy, and is cited as having a ‘poor business climate, institutional deficiencies, and a large and inefficient public sector that employs three-quarters of the workforce;
    10. Employees of companies engaged in outdoor operations, such as construction and mining, are by law prevented from working outside between 11am and 5pm during the months of June, July and August.
  • 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.

Contact us

For additional information on our business registration services in Kuwait, please contact our in-house country expert, Ms. Evgeniya Salamonava, directly:
Consultant at HC - Evgeniya
  • Ms. Evgeniya Salamonava
  • Senior Client Engagements Manager
  • Contact me!