Kuwait: Business Environment

Accounting Rules

Tax Year: From January 1st to December 31st.
Accounting Standards: There is not a mandatory accounting system required in Kuwait. However, companies are asked to respect the International Financial Reporting Standards. Projects of harmonization and unification of an accounting system and its presentation are being discussed at the Gulf Cooperation Council.
Accounting Regulation Bodies: Public Authority for Industry.
Stock Exchange of Kuwait.
Accounting Reports: All commercial companies of Kuwait are required to keep several accounting books every year. These must be written in Arabic:
- Sales Journal
- Inventory
- General Ledger
- Expenditures Analysis Book
- Stock Shares Evolution Reports
In order to create a financial analysis, companies are required to generate a balance sheet and a profit and loss report, which have to be submitted to the Ministry of Commerce and Industry for its evaluation no later than three months after the end of the fiscal year.
Publication Requirements: The companies wishing to enter in the stock market of Kuwait are required to provide accounting publications. They must have published their audited accounting reports for the last two years prior to their introduction into the stock market. These financial statements must show their structure and their net profits. Still, the Council of Directors of the Stock Exchange of Kuwait can request other elements before giving its approval. All companies quoted on the Stock Market of Kuwait must publish their audited financial statements with their complete balance sheet and the profit and loss report no later than three months after the end of the fiscal year. They must also publish their periodical statements no later than two months after the end of their fiscal period.
Professional Accountancy Bodies: Association of Accountants and Auditors of Kuwait (in Arabic)
Certification and Auditing: The certification and the control of accounts have to be made by an organization independent from the company, certified and registered at the Ministry of Commerce and Industry. The process of certification and control of accounts are ruled by the Law No. 5 of 1981. You can contact an external auditor: Deloitte, Ernst & Young, PricewaterhouseCoopers and KPMG.
Accounting News

Tax Rates

Consumption Taxes

Nature of the Tax: Kuwait is required to introduce a VAT regime under a common decision that applies to all Gulf Cooperation Council member countries. Nonetheless, the National Assembly of Kuwait unilaterally decided to postpone the introduction of VAT until 2023, but it has not been implemented yet.
Tax Rate: 5% (when VAT will be implemented)
Reduced Tax Rate: Not applicable
Other Consumption Taxes: The National Assembly of Kuwait decided, in May 2018, to accelerate the phasing-in process of excise duties on certain products including tobacco products, energy drinks and carbonated beverages; however, the exact date is yet to be determined.

Corporate Taxes

Company Tax: 15%
Tax Rate For Foreign Companies: Only companies with foreign ownership are subject to corporate income tax in Kuwait on their Kuwait-sourced income.
Branches are also taxed at 15%.
Capital Gains Taxation: Capital gains on the sale of assets and shares are considered ordinary income and subject to the standard tax rate of 15%. Exemptions are available for profits generated from dealing in securities on the Kuwait stock exchange.
Main Allowable Deductions and Tax Credits: Documented expenses incurred to generate or maintain an income are generally deductible.
Amortisation of tangible and intangible assets is tax-deductible at rates ranging from 4% to 33.33%. Goodwill cannot be amortised for tax purposes.
Start-up fees incurred before the signing of a contract are not eligible for a deduction. Interest charges are only deductible if they relate to transactions in Kuwait and are paid to a local bank.
Bad debts may be deducted if they relate to transactions in Kuwait and a final decision is made by a court of competent jurisdiction over the dispute.
Donations to recognised Kuwaiti charitable organisations are deductible.
Head office expenses are deductible up to 1.5% of income earned in Kuwait after deducting any share of subcontractors. Payments made by the head office to foreign subsidiaries for the supply of goods, design costs and consulting services are also deductible. Provided certain conditions are met, subcontract costs can be deducted.
Tax losses can be carried forward for up to three years. The carryforward of losses is prohibited in the following cases: 1) the tax return does not include any income earned in Kuwait; 2) change in the legal structure of the company; 3) the merger of the company with another entity; 4) liquidation or disposal of the business in Kuwait. The carryback of losses is prohibited.
Other Corporate Taxes: Social security contributions payable by the employer amount to 11.5% of salary (capped at KWD 2,750 per month). Employers are not required to contribute to the social security scheme for their expatriate employees.
Publicly-traded corporations pay an employment support tax of 2.5% of their net profits to support employment in the private sector.
Kuwaiti joint-stock companies (listed and unlisted) pay 1% of their net profit to pay the Zakat (religious tax) or contribute to the state budget. They are also liable for a tax equal to 1% of their profit (after the transfer of reserve funds and carryforward of tax losses) to finance the Kuwait Foundation for the Advancement of Sciences.
Payments from a contractor/subcontractor that are yet to settle their tax liabilities with Kuwaiti authorities and obtain a certificate should be withheld at a rate of 5%.
No property or transfer taxes are levied in Kuwait.
Other Domestic Resources: Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

	Kuwait	Middle East & North Africa	United States	Germany
Number of Payments of Taxes per Year	12.0	20.8	10.6	9.0
Time Taken For Administrative Formalities (Hours)	98.0	204.0	175.0	218.0
Total Share of Taxes (% of Profit)	13.0	32.1	36.6	48.8

Source: Doing Business - Latest available data.

Individual Taxes

Tax Rate

No income taxes are currently imposed on individuals in Kuwait

Allowable Deductions and Tax Credits: Not applicable
Special Expatriate Tax Regime: Not applicable

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: List of countries having a fiscal agreement with Kuwait.
Withholding Taxes: Dividends: 0%, Interest: 0%, Royalties: 0%
These incomes are treated as ordinary business incomes.
Bilateral Agreement: Kuwait and Mauritius concluded a Double Taxation Agreement.

Sources of Fiscal Information

Tax Authorities: Overview of Kuwait's tax measures in response to Covid-19
Tax Payment Service
Other Domestic Resources: Kuwait Direct Investment Promotion Authority - Kuwait Economic and Fiscal Laws

Intellectual Property

National Organisations: In Kuwait, patents and trademarks must be registered in the Trademark Control and Patents Office in the Ministry of Trade and Industry (MCI). You can contact the Office by Email.
Regional Organisations: None.
International Membership: Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property

National Regulation and International Agreements

Type of property and law	Validity	International Agreements Signed
Patent Law No. 4 concerning Patents, Designs and Industrial Models, May 15, 2005	15 years, renewable for a period limited to 5 years. 10 years for chemical discoveries, medications and pharmaceutical compositions.
Trademark Law No. 3 of 2001	10 years, renewable one time.
Design Law No. 4 concerning Patents, Designs and Industrial Models, May 15, 2005	5 years, renewable for two consecutive 5-year periods.
Copyright Law No. 3 of 2001	50 years after the death of the author.
Industrial Models Law No. 3 of 2001	10 to 15 years.

Legal Framework

Independence of Justice: Judicial Power in Kuwait is not really independent. The Emir appoints all judges and the Executive branch approves their promotions and renewals of their functions.
Equal Treatment of Nationals and Foreigners: The Judiciary System of the country does not always guarantee a fair trial to a foreigner.
The Language of Justice: The judicial language used in the country is Arabic.
Recourse to an Interpreter: It is possible to obtain the services of an interpreter.
Sources of the Law and Legal Similarities: The main source of the country's law is the Constitution of 1962. The legal system is based on a civil law system with the exception of personal status where Islamic law prevails. Kuwait has not accepted mandatory jurisdiction from The International Court of Justice.
Checking National Laws Online: Kuwait's Laws database

Standards

National Standards Organisations: Standards and Regulations of the Public Authority for Industry, State of Kuwait.
Standarization Organization for the Gulf Cooperation Council.
Integration in the International Standards Network: All products must comply with the Kuwaiti standards (Kuwaiti Standard Specification, KSS). If there are no specific standards applicable in Kuwait, then the Gulf countries' standards must be applied (Gulf Standard Specifications, GSO). The countries that form the Gulf Cooperation Council have created an organization responsible for the standardization: The GCC Standardization Organization, of which Kuwait is a member. Its goal is to unify the standards of all the Gulf's countries in order to create a free-trade zone following the European Union's model. The Public Authority for Industry also represents Kuwait in the International Organization for Standardization (ISO), and the International Organization of Legal Metrology (OIML).
Classification of Standards: ISO, GSO or KSS followed by 5 digits, a hyphen, another digit, sometimes another hyphen and a digit.
Online Consultation of Standards: They are available for certain products on the site Industrial Public Authority or on the site Standardization Organization for the Cooperation Council for the Arab States of the Gulf (GSO).
Certification Organisations: The Public Authority for Industry (PAI) is charged to issue the certificates.

Business Practices

General Information: Commisceo Global, Culture, customs and etiquette - Kuwait Travel Guide
InterNations, Business etiquette in Kuwait
Opening Hours and Days: Banks are open for customers from Sunday to Thursday from 8 AM to 1 PM.
Government offices are open from Saturday to Wednesday from 7:30 AM to 2:30 PM in winter and from 7:00 AM to 2:00 PM in summer.
Stores and shops are open from Saturday to Thursday morning from 8:30 AM to 12:30 PM and from 4:00 PM to 7:00 PM.

Public Holidays

New Year	January 1st
Islamic New Year	Variable
Kuwait's National Day	February 25
Liberation Day	February 26
Prophet's Birthday	Variable
Ascension of the Prophet	Variable
Aid el Fitr	Variable, at the end of Ramadan
Aid El Adha	Variable, in accordance to the Lunar Calendar, but always 70 days after the end of Ramadan

Holiday Compensation: If a holiday falls on a Friday (resting day of the week), it is carried forward to the following working day.

Periods When Companies Usually Close

Aid El Fitr	2 days
Aid El Adha	4 days

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