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Kuwait Corporate - Tax credits and incentives

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Foreign tax credit

Foreign taxes paid to a country with which Kuwait has a treaty for avoidance of double taxation may be eligible for credit, up to the maximum of the Kuwaiti tax that would have been payable on such income.

Leasing and Investment Companies Law No. 12 of 1998

Leasing and Investment Companies Law No. 12 of 1998 allows the formation of investment and leasing companies having their principal place of business in Kuwait, with Kuwaiti or foreign shareholders. The law grants a five-year tax holiday to non-Kuwaiti founders and shareholders of such companies, beginning on the date of establishment of the companies.

Foreign Direct Investment Law No. 116 of 2013 (FDI Law)

The FDI Law gives several incentives and flexibility, including:

  • More efficiency within the process by introducing the Kuwait Direct Investment Promotion Authority (KDIPA), which is responsible for determining, evaluating, and granting the licence and approval for foreign companies operating in Kuwait (compared to the old committee and Council of Ministers).
  • More flexibility by allowing foreign companies to have the eligibility to structure and operate through a 'branch' and 'representative offices' in Kuwait.

The issuance and amendments made to the investment law, as well as the incentives granted to foreign investors in Kuwait, shall be applicable to activities within specific economic sectors, including all industries with the exception of activities listed on the negative list.

Kuwait Free Trade Zone (KFTZ)

Businesses set up in the KFTZ for carrying on specified operations are exempt from taxes on operations conducted in the zone. Foreign entities can own 100% of such businesses. Currently, the government of Kuwait has stopped issuing KFTZ licences.

Build, operate, and transfer (BOT)

Kuwait has begun to use the BOT method in respect of some large infrastructure projects. Tax and tariff concessions may be built into a BOT contract.

Circular No. 50 of 2002

As per Circular No. 50 of 2002 issued by the DIT regarding treatment of exempted companies under tax laws and/or other special laws and/or tax treaty, exempted companies shall comply with the provisions of submission of tax declaration, inspection, and assessment procedures like other companies in order to be eligible for exemption.

Some of the privileges under this law include:

  • Exemption from income tax or any other taxes for a period of ten years from the commencing of the actual operations of the enterprise.
  • Benefits under double taxation agreements.
  • Benefits under investment encouragement and protection agreements.
  • Total or partial exemption from customs duties on imports.
  • Recruitment of required foreign labour.
  • Allotment of land and real estate.

Last Reviewed - 29 November 2017

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