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Kuwait is a wealthy country rich in natural resources and a top ten oil exporter, with 1.4 million residents, 3.3 million expatriates, and 6% of the world’s oil reserves. Although the economy is mostly dependent on oil, the national development plan, New Kuwait Vision 2035, places a strong emphasis on economic diversification. These made numerous changes that helped the country move up in the World Bank’s 2020 Doing Business Report from 97 to 83 out of 190 nations.

Business opportunities in Kuwait

Due to the following factors, company incorporation in Kuwait  can be extremely advantageous for foreign investors promising innovation and growth:

Water, electricity, land, and labor are all inexpensive, and some are even heavily subsidized—up to an astounding 86 percent.

  • Wealthy and shrewd Kuwaiti nationals.
  • The building, project, and construction industries have experienced significant growth.
  • A new railway and metro system, as well as new energy projects and oil exploration.
  • Private project development and construction.
  • Several project opportunities, such as a $10 billion electricity generation project that has been suggested.
  • Government’s high priority for healthcare infrastructure.

The $104 billion National Development Plan includes the building of a new Kuwait University campus, new hospitals, new residential complexes, and a new airport terminal.

With recent government measures, the automobile, oil and gas, computers/ICT, telecommunications equipment, and construction equipment industries appear hopeful.

Who can start a business in Kuwait

According to the Foreign Direct Investment Law of 2013, foreign ownership may only be 100 percent foreign with Kuwait Direct Investment Promotion Authority approval (KDIPA). At least 51% of all firm shares must be owned by GCC or Kuwaiti nationals.

Total foreign ownership is only taken into account if the business structure is seen as having the potential to boost jobs and diversify the country’s economy. Additionally, the business organization must profitably utilize Kuwaiti services and natural resources and promote exports.

According to KDIPA’s most recent statistics, 37 foreign companies have received approval for 100% foreign ownership to date.

Business structures available in Kuwait

Foreigners seeking investment opportunities in this nation have a variety of options to select from when it comes to company entities.

With a minimum share capital of 1000 KD, a Limited Liability Company (LLC) structure is the most popular, simple, and quick to incorporate. However, an LLC is only allowed to hold a maximum of 49% ownership in the banking or insurance industries.

A Kuwaiti Shareholding Company (KSC), also known as a joint-stock company, allows a maximum of 49% foreign equity participation and can be publicly traded on a local stock exchange.

In a limited liability partnership, there are two types of partners: 

  • General partners who are responsible for the obligations of the company, 
  • Limited liability partners share earnings proportionately according to the number of shares they own.

Only GCC nationals are allowed to open branches, which are not required to have sponsors. Only international companies that have received KDIPA approval may open a branch office.

If you are unwilling to establish a local firm here, an agency entails a deal with a local commercial agent. The standard payment structure for a commercial agent is a flat fee of the revenue generated by your Kuwaiti company, with all terms outlined in the agency agreement.

A joint venture is a partnership between two or more natural or legal persons that are typically used for construction projects and carried out following the Kuwaiti partner’s trade license. 

Businesses taxed in Kuwait

Kuwaitis and citizens of the GCC are exempt from paying corporate income tax on their businesses (CIT). Companies in the GCC that have foreign ownership are taxed according to the level of foreign ownership. Foreign businesses operating in Kuwait either directly or through an agency are subject to CIT on their income and capital gains.

Only income from activities in Kuwait is taken into account for CIT, and it is liable to tax in Kuwait at a flat rate of 15%.

All publicly listed and closed Kuwaiti shareholding enterprises are subject to the 1% of net corporate profits Zakat tax.