Law No. 116 of 2013 Regarding the Promotion of Direct Investment in the State of Kuwait (“KDIPA Law”) provides benefits to new and existing foreign capital investment projects in the country.
Types of Investment Entities
The KDIPA Law contemplates three types of investment entities, which can be licensed by the Kuwait Direct Investment Promotion Authority. Entities can take the form of a Kuwaiti company in accordance with the Companies Law or operate as a branch of a foreign company. In addition, representative offices can be established to exclusively conduct marketing studies, without engaging in any commercial activities or activities of a commercial agent. Foreign participation in a Kuwaiti company may amount to 100% of the capital of the company.
Incentives For Investors
The KDIPA Law grants various privileges and exemptions. These include:
- Opportunity for investment in excess of 50% (up to 100%) in Kuwaiti companies by non-Kuwaitis;
- Full or partial exemption from customs duties on certain imports and other government charges for approved projects;
- A tax holiday of up to 10 years with respect to non-Kuwaiti shareholders’ shares of the profits from qualifying projects. An additional tax holiday for a similar period is granted for further investment in an already approved project;
- A guarantee of repatriation of profits and capital invested in the project;
- Benefit of double tax treaties and investment promotion and protection agreements;
- Long-term leases of land in industrial estates at low rents; and
- Employment of required foreign manpower without being subject to the restriction contained in Law No. 19 of 2000 Concerning Employment of Kuwaiti Manpower.
Criteria For Granting Privileges
The KDIPA Law includes a list of non-exhaustive criteria upon which the applications for investment licenses will be assessed. Among others, they include such considerations as follows: the transfer and localization of technology, management methods, and expertise; the amount and quality of products and services on offer; the need for direct investment and its contributions to economic diversification; increase in national exports; creation of job opportunities and training of the national workforce; positive environmental impact; and use of national products and services with a national character. The number, type and duration of the privileges and exemptions are based upon the assessment of such criteria.
The KDIPA Law establishes a 30-day deadline for decisions to be rendered in respect of investment licensing. In addition, a “one-stop shop” approach is foreseen. An administrative unit within the Kuwait Direct Investment Promotion Authority shall operate the “one-stop shop”. The aim of this unit is to coordinate with the relevant government authorities, with a view to completing all procedural steps within the timeframe prescribed by the KDIPA Law.