Business entities in Kuwait in 2021
From all the entity types that can be registered in Kuwait (see below), the most commonly used options are i) the Kuwait joint venture LLC and ii) the Kuwait agency agreement;
Whereas most of our Clients initially prefer to register a wholly foreign-owned Kuwait LLC, it is strictly restricted under Kuwaiti law and therefore only recommended for big multinational corporations that have a high budget and can meet the challenging number of requirements set by the Kuwait Direct Investment Promotion Authority (also referred to as KDIPA);
For more details regarding the Kuwaiti entity options, refer to the page below.
Doing business in Kuwait with a local entity
The Kuwait Joint Venture LLC (also called JV LL)
- Registering a joint venture LLC in Kuwait is the simplest business entity recognized under the Kuwaiti law. For this reason, is our Client’s preferred option;
- This entity type requires the appointment of at least i) one director, who can be of any nationality and ii) a 51% Kuwaiti or GCC shareholder. Consequently, foreign shareholding is restricted to 49%. If required, Healy Consultants Group will be pleased to supply our Client with a reliable professional passive nominee Kuwait national shareholder;
- The minimum paid up capital of such type of entity starts at US$1,000 for most business activities;
- 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.
- For more detailed information about this entity, kindly refer to this webpage
The wholly foreign-owned Kuwait LLC (also known as 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). It typically takes a minimum of 6 months to register a WLL;
- To obtain such approval, our Clients will submit a detailed business plan highlighting i) the company’s business model ii) its plan to hire local employees iii) its capital investment and iv) potential benefits to Kuwaiti economy;
- The required paid-up capital is fixed by KDIPA and it must be deposited to the corporate bank account during the process of registration. The paid up share capital varies according to the expected nature and size of the business of the company and the planned company’s contribution to the Kuwaiti economy. Our Client should expect a minimum paid up share capital ranging from US$75,000 to US$133,000;
- Best uses: registering a WLL in Kuwait is challenging, expensive and time consuming. We consequently recommend this entity only to multinational corporations planning to hire a significant number of employees in Kuwait or expecting to proceed with technology transfers.
- For more detailed information about this entity, kindly refer to this webpage.
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;
The Kuwait Joint Stock Company (JSC)
- A 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
- GCC companies that are owned fully by GCC nationals, may register a branch in Kuwait within 2 months;
- Similar to the WLL above, foreign non-GCC companies wanting to register a branch in Kuwait are governed by KDIPA and therefore i) it will take a minimum of 6 months to register and ii) has high paid up share capital requirements and iii) must hire considerable amount of Kuwaiti employees and iv) is recommended only for multinational companies
- 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 through an agency agreement
- Our Clients who do not wish to invest substantial capital amount may choose to work with a commercial agent. Under this option, there is no requirement to setup a new company, nor paid up share capital nor rent physical office space;
- Instead, 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 a Commercial Agency Agreement works;
Comparison of business entity types in Kuwait
Operations and logistics JV LLC WLL FZ LLP PLC Branch RO Agency Agreement Doing business in Kuwait permitted? Yes Yes Yes Yes Yes Yes No Yes Allowed to sign contracts with local Clients? Yes Yes Yes Yes Yes Yes No Yes Allowed to invoice local Clients? Yes Yes No Yes Yes Yes No Yes Can rent local office premises? Yes Yes Yes Yes Yes Yes Yes Yes Allowed to import raw materials? Yes Yes Yes Yes Yes Yes No Yes Allowed to export goods? Yes Yes Yes Yes Yes Yes No Yes Accounting and tax Corporate tax rate? 15% 0% or 15% 0% 0% 15% 0% or 15% 0% 15% Corporate bank account? Bank of Kuwait Citibank Kuwait Gulf Bank Kuwait NBK Citibank Kuwait HSBC Kuwait HSBC Kuwait Bank of Kuwait Statutory audit required? Yes Yes Yes No Yes Yes Yes Yes Annual tax return to be submitted? Yes Yes No Yes Yes Yes No Yes Access to DTAAs? Yes Yes Yes No Yes Yes No Yes Company law Issued capital required? US$1,000 US$75,000 US$3,300 US$3,300 US$3,300 None None None Resident director required? Yes Yes Yes Yes Yes Yes Yes Yes Resident bank signatory required No No No No No No No No KDIPA approval required before registration? No Yes No Yes Yes Yes Yes No local shareholder required? Yes (51%) No No Yes (51%) No No No Yes (100%) Minimum number of directors? 1 1 1 2 3 1 1 1 Minimum number of shareholders? 1 1 1 2 5 Parent company Parent company 1 Individual shareholders allowed? Yes Yes Yes Yes Yes No No Yes Corporate director(s) allowed No No No No No No No No Corporate shareholders allowed? Yes Yes Yes Yes Yes Yes Yes Yes Public register of shareholders and directors Yes Yes Yes Yes Yes Yes Yes Yes Immigration Can the entity hire expatriate staff? Yes Yes Yes Yes Yes Yes Yes Yes How long to get work permit approved? 6 weeks 6 weeks 6 weeks 6 weeks 6 weeks 6 weeks 6 weeks 6 weeks Fees and timelines How long to set the entity up? 2 months 6 months 6 months 6 months 6 months 6 months 6 months 2 months How long to open corporate bank account? 1 month 1 month 1 month 6 weeks 6 weeks 6 weeks 6 weeks 6 weeks Estimate of engagement costs US$26,740 US$76,390 US$50,665 US$37,455 US$47,715 US$46,825 US$46,825 US$15,200 Draft Invoice View invoice PDF View invoice PDF View invoice PDF View invoice PDF View invoice PDF View invoice PDF View invoice PDF View invoice PDF
Frequently asked questions
- Will there be restrictions in ownership if foreigners setup a Kuwait company?
No. That said, 100% foreign owned entities in Kuwait are challenging, expensive and time consuming to set up. Refer to this WLL section for detailed information re the same;
- Will I be required to get a full audit if I setup a small business in Kuwait?
Yes. A foreign owned Kuwait company requires an annual audit of the company’s financial statements;
- 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.
- Will there be restrictions in ownership if foreigners setup a Kuwait company?