Doing Business in Kuwait 2011 Doing Business in Kuwait Doing Business in Kuwait In the preparation of this guide, every effort has been made to offer current, correct and clearly expressed information. However, the information in the text is intended to afford general guidelines only. This publication is distributed with the understanding that Ernst & Young is not responsible for any actions taken on the basis of information in this publication, nor for any errors or omissions contained therein. Ernst & Young is not attempting through this book to render legal, accounting or tax advice. Readers are encouraged to consult with professional advisers for advice concerning specific matters before making any decision. The information in this publication should be used as a research tool only, and not in lieu of the tax professional's own research with respect to client matters. Ernst & Young firms provide public accounting, tax and management consulting services in the principal cities of the world. This book is one in a series of country profiles prepared for use by clients and professional staff. Additional copies may be obtained from Ernst & Young (Al Aiban, Al Osaimi & Partners) P. 0. Box 74 Safat 18-21 Floor, Baitak Tower 13001 Safat, Kuwait. Telephone: (965) 22452880 Facsimile: (965) 2456419 All Rights Reserved Doing Business in Kuwait 2 – Ernst & Young Preface Preface This book was prepared by Ernst & Young, Kuwait, a member firm of Ernst & Young. It was written to give the busy executive a quick overview of the investment climate, taxation, forms of business organisation, and business and accounting practices in Kuwait. Making decisions about foreign operations is complex and requires an intimate knowledge of a country's commercial climate, with a realization that the climate can change overnight. Companies doing business in Kuwait, or planning to do so, are advised to get current and detailed information from experienced professionals. This book reflects information current at 2011. All Rights Reserved Doing Business in Kuwait 3 – Ernst & Young Contents Contents Doing business in Kuwait ....................................................................................................... 2 Preface .................................................................................................................................. 3 A. Kuwait - Executive summary ......................................................................................... 6 A.1 Regulatory constraints and reliefs ......................................................................... 6 A.2 Government attitude and incentives ...................................................................... 6 A.3 Tax system ........................................................................................................... 6 A.4 Financial reporting and audit requirements ............................................................ 6 B. Business environment ................................................................................................... 7 B.1 Business and investment environment ................................................................... 7 B.2 Economic trends and performance ......................................................................... 7 B.3 Currency .............................................................................................................. 8 B.4 Economic structure .............................................................................................. 8 B.5 Relationship of government and business .............................................................. 8 B.6 Financial sector .................................................................................................. 10 B.7 Essential industries............................................................................................. 11 B.8 Energy, Minerals and other Natural resources ...................................................... 11 B.9 Foreign trade leading .......................................................................................... 12 C. Foreign investment ...................................................................................................... 13 C.1 Exchange controls and debt-to-equity requirements ............................................. 13 C.2 Restrictions on foreign investment ...................................................................... 13 C.3 Investment incentives ......................................................................................... 15 C.4 Sources of finance for foreign investors ............................................................... 16 C.5 Importing and exporting ...................................................................................... 17 C.6 Registration of intellectual property .................................................................... 18 D. Structure of business entities ...................................................................................... 19 D.1 Companies ......................................................................................................... 19 D.2 Partnerships ....................................................................................................... 20 D.3 Joint ventures .................................................................................................... 20 D.4 Operations of foreign companies ......................................................................... 20 D.5 Structures used by foreign investors ................................................................... 21 D.6 Establishing a corporation ................................................................................... 22 D.7 Annual requirements for corporations ................................................................. 24 D.8 Mergers and reorganisations ............................................................................... 24 E. Labour force ................................................................................................................ 25 E.1 Availability of skilled workers .............................................................................. 25 E.2 Social security .................................................................................................... 26 E.3 Payroll taxes ...................................................................................................... 26 E.4 Special requirements for foreign nationals (very much hypothetic statement) ....... 26 F. Taxation ...................................................................................................................... 27 F.1 Principal taxes introduction ................................................................................. 27 F.2 Taxes on corporate income and gains .................................................................. 27 F.3 Non-resident companies ...................................................................................... 39 F.4 Partnerships ....................................................................................................... 39 All Rights Reserved Doing Business in Kuwait 4 – Ernst & Young Contents F.5 Joint ventures .................................................................................................... 40 F.6 Withholding taxes ............................................................................................... 40 F.7 Foreign-exchange controls. ................................................................................. 40 F.8 Other taxes ........................................................................................................ 40 F.9 Tax treaties ........................................................................................................ 41 G. Financial reporting and auditing ................................................................................... 44 G.1 Statutory requirements ...................................................................................... 44 G.2 Source of accounting principles ........................................................................... 44 G.3 Financial reporting .............................................................................................. 44 G.4 Audit requirements ............................................................................................. 45 G.5 Accounting profession ........................................................................................ 45 H. General ........................................................................................................................ 46 H.1 Geography and climate ....................................................................................... 46 H.2 Population and language ..................................................................................... 46 H.3 Government and political system ......................................................................... 47 H.4 Legal environment .............................................................................................. 47 H.5 International relations and associations ............................................................... 48 H.6 Entry Visas and Work Permits ............................................................................. 48 H.7 Living in Kuwait .................................................................................................. 49 Useful addresses and telephone numbers ............................................................................