Kuwait

Corporate - Tax credits and incentives

Last reviewed - 12 January 2020

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 provides foreign companies with several incentives, including:

  • Expedited process by introducing a one-stop-shop authority, the Kuwait Direct Investment Promotion Authority (KDIPA), that is responsible for evaluating and granting the licence and approval for foreign companies operating in Kuwait (compared to the old committee and Council of Ministers).
  • Added flexibility of allowing foreign companies the possibility of establishing and operating through a 100% foreign-owned ‘branch’ or ‘representative office’ in Kuwait.
  • Allowable tax credit for a certain number of years.
  • Total or partial exemption from customs duties on imports.
  • Recruitment of required foreign labour.

The incentives granted to foreign investors in Kuwait under the FDI Law are applicable to activities in certain economic sectors and subject to the fulfilment of certain requirements including:

  • The transfer of advanced technology to Kuwait.
  • Stimulation of the local market through engagement of local suppliers for operational purchases.
  • Creation of job opportunities for Kuwaiti nationals.

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.

Circular No. 50 of 2002

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

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.

Foreign tax credit

Foreign taxes paid in 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.