Kuwait Tax & Business Guide - Deloitte

Basic facts
Population 3.2m Inflation 3.0% (2006)
Main languages Arabic, English GDP per head US$30,900*
Currency Kuwaiti dinar (KWD) GDP growth 12.6% (2006)*
Economic communities WTO
GDP sources 0.4% agriculture, 57.0% industry, 42.6% services
*Economist Intelligence Unit estimates.
Political environment

Kuwait is a constitutional emirate. The emir is the former prime minister, Sheikh Sabah al-Ahmed al-Jabr al-Sabah, who became emir following the death of Sheikh Jabr al-Ahmed al-Jabr al-Sabah in January 2006. Power is exercised by the emir through a Council of Ministers, headed by the prime minister who is chosen by the emir.
Foreign trade and investment
Exports US$55.7bn (2006)* Imports US$14.7bn (2006)*
*Economist Intelligence Unit estimates.

Leading export markets: Japan, Korea and the US.

Major exports: Oil and refined petroleum products, and fertilisers.

Oil accounts for nearly one-half of GDP, 95% of export revenue and 80% of government income.

Kuwait has signed a Trade and Investment Framework Agreement (TIFA) with the US.
Business and financing
Business forms Limited liability company (WLL), shareholding company (KSC), agency agreement

Foreigners in Kuwait must conduct operations by establishing a Kuwaiti company (KSC or WLL) or by operating through a Kuwaiti agent who has the necessary trade licence. The limited liability company is simple to establish and operate, and an agent easy to appoint, making these two forms of company popular with foreign investors.

Foreigners are limited to 49% ownership of WLLs and KSCs.

Insurance is open to foreign investment. Real-estate investment is restricted to Gulf Co-operation Council (GCC) nationals.
Labour environment
Unemployment rate N/a Minimum wage None

There is no minimum wage in the private sector. In the public sector, which employs over 93% of Kuwaitis, the current minimum wage is KWD 226 per month for Kuwaiti single persons and KWD 301 per month for married Kuwaitis, compared with KWD 90 for non-Kuwaitis.

Most work permits require a local sponsor.
Taxation
Corporate tax
Main rate Progressive rates to 55%

Corporate tax is charged on all corporate bodies carrying out a trade or business in Kuwait. The term "carrying on a trade or business in Kuwait" is interpreted broadly by the tax authorities with the effect that tax is imposed on all Kuwaiti-based sources of income.

The tax applies to foreign entities and their shares of profits in a Kuwaiti entity at rates ranging from nil up to 55%. Dividends received from income that has already been subject to tax generally are not taxable in the hands of the recipient company.

Parliament's Financial and Economic Affairs Committee recently approved changes to the method of calculating taxes and the tax rates. Although a flat 15% tax rate has been approved, the approval has not been sanctioned by parliament, and there is no indication as to when this new rate will become effective.
Individual tax
Income of individuals is not taxed

There is no taxation on the income of individuals.
Capital gains
Company gains taxed as income

Capital gains of companies are included in taxable income and taxed at the normal rates. Gains of individuals are not taxed.
Indirect tax
No consumption taxes

There are no consumption taxes in Kuwait.
Tax administration and compliance
Tax year Corporations: calendar year; Individuals: not taxed

Companies must file a tax return on or before the 15th day of the fourth month following the end of the tax year. Tax, if any, is payable in four equal instalments on the 15th day of the 4th, 6th, 9th and 12th months following the end of the tax period. In some cases, an extension of the filing date of up to 30 days may be obtained. If an extension is granted, tax must be paid in four equal instalments or as a lump-sum amount with the tax return.
Retentions from contract payments
Retention of 5% on payments made under contract to a foreign company

Although there is no withholding tax in Kuwait, any establishment operating in Kuwait must provide copies of its contracts or subcontracts concluded in Kuwait with any foreign companies to the tax authorities and withhold 5% from each payment to the foreign company. The amounts are to be withheld until the contractor provides a tax clearance certificate from the tax authorities confirming that the contractor has settled its tax liabilities.
Additional tax information
Withholding taxes There are no withholding taxes.
Tax treaties Kuwait has concluded more than 35 tax treaties.
Dividends Dividends are not taxable in the hands of the recipient company if they have already been subject to tax.
Revenue protection There is no anti-haven (CFC) legislation. The tax authorities have issued a circular that deems a minimum taxable profit on goods received from abroad of between 6.5% and 15%, depending on the relationship of the supplier and customer.
Groups There is no provision for group taxation.
Incentives Foreign capital investment; construction projects; free zones; investment and leasing companies.
Other taxes Contribution to the Kuwait foundation for advancement of sciences; National labour support taxes on listed companies and Zakat.