Middle East Tax Services

Law no. 116 of 2013 for Promoting

Foreign Direct Investment in
Kuwait

Strictly Private
and Confidential

pwc

Table of Contents

Law No. 116 of 2013 for Promoting

Foreign Direct Investment in
Kuwait

Law No. 116 of 2013 for Promoting Foreign

Direct Investment in Kuwait

The newly issued Executive Regulations have shed the light and
set guidance and definition for the Investor, individual or with
the participation of another investor, who employs his/their
capital directly through an Investment Entity in the State of
Kuwait who may have potential projects that can be licensed in
accordance with provisions of the Law and these Regulations.
The

its

executive rules have clarified the duration and means of application,

type of available entities allowed as per the law as well as guidance of
applying and impact of changes in different circumstances. (merger &
demerger etc.)
This report shall provide you with a synopses of the actual official
issued announcement which precedes the Executive Regulations' of
establishing Law No. 116/2013 regarding the Promotion of Direct
Investment in the State of Kuwait in a summarized illustrative
manner.
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4
A

Operating
Structures
W-

The new executive rules have determined the following available structures for foreign
investors to operate through:
Kuwaiti company established where a Foreign Investor participation in such company
may amount to 100% of the capital of the shareholding company;
A branch of a foreign company licensed to operate within the State of Kuwait; and

Representative offices in the State of Kuwait.

I
Administrative

unite in charge of
finalizing
Investment entity
transactions
As per the issued
executive rules, KDIPA

has introduced the One Stop Shop unite which will be responsible
for the following:
Guidebook on post investment matters to ease out transactions
processes by Investor; and
Provide guidance for the required steps to be followed by Foreign
Investors and will clarify all issues and concerns investors might
have throughout the process.

Judicial Officers

Law officers appointed to monitor the implementation of provisions of laws and regulations and
implementation of decisions.

&

Investment Entity
and Applications to
the Authority
Principles and Rules of
license shall be set for
each Investment Entity.
Application forms
(not yet issued)
shall be prepared as
for the following:
Request for licensing the
Investment entity

Grant
and
request
for
Incentives and Exemptions

Amending
name/address/purpos
e/capital/head office

Amending participation
percentage in ownership

Only valid
documents
are
accepted
stating the
timetable of
commence
ment,
implement
ation &
operation.

k Submission 1 I
i R equirements

Documents can now be

submitted via email or
registered mail.

Receipt is
provided by
KDIPA upon
successful
submission
proving
acceptance of
application.
Acceptance/Rejection
shall be communicated
to applicants where the
rejection shall be
communicated in
writing and reasoned.

\4

11A
A

Conditions of License Applications

A preliminary study should be attached with Application
where it should include the following in particular:
l.

Establishing a
Kuwaiti
company

3
4
5

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Type of activity or project to be carried out;

Legal form of the company to be licensed;
Volume of investment;
Finance structure and sources;
Economic and environmental impact;
Expertise and capabilities of the Investor;
Needs of Investment Entity of national and foreign
manpower, land spaces, raw material, intermediate goods
and sources of obtaining the same;
8. Estimation to quantities of water and power needed
annually; and
9 Data or explanations required by the Authority before or
after filing the Application.
Application
Establishing
a for a foreign company branch should include a preliminary
Foreign
study as above in addition to the following:
Company
Branchcopy of the memorandum;
1. Certified
2. Articles of association of the company; and
3. Latest audited balance sheet.

A statement should be attached with the application that includes

the following:
1.
2.
3.
4.
5.

Purpose of establishing the office;

Certified copy of the memorandum;
Articles of association of the foreign company;
Latest audited balance sheet; and
Data or explanations required by the Authority before or after filing
the Application.

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Qualified Investors shall

obtain all required
approvals within one year
as of the date of issuing
the license.

.
Appli
catio
n
decis
ion
shoul
d be
made
withi
n 30
days
from
date
of
fulfill

ing
all
requi
reme
nts &
subm
issio
n.

Incentive
s&
Exemptio
ns

 Applications submitted should meet all the conditions and rules

to obtain the relevant tax incentives and exemptions;

Multi-activity entities with the privilege of multiple benefits shall

be assessed whereby the entity shall benefit from the approved
and licensed activity only;

Separate accounts should be maintained for an entity with multiple

activities. Exemptions shall be calculated from the date of actual
operation of each activity;
Exemption period assessed by Authority after submission of
application; and
Tax exemption not to exceed 10 years can be offered to qualified
applicants noting that the exempted investor will be still required
to file a tax return setting the basis of exemption with the MOF as
per their usual requirements and deadlines.

Custom Exemptions

Custom exemption applications should be submitted listing

materials subject of application;

Cooperation mechanisms of technical and procedural areas

relating to customs shall be set with regards to the approval of
the imports; and

Entities shall be entitled to exemption, taking the following into

consideration;
Imports should be under the name of the Investment
Entity or for it; and
Imported materials should be in line with the needs of the
Investment Entity in terms of kinds and quantities.

Exempted Custom Imports

An Investment Entity may be exempted from taxes, customs
duties or any other fees that may be payable on imports required
for the purposes of the Investment Entity without prejudice to the
Unified Customs Code for the Gulf Cooperation Council
Countries, including the following:
Machinery, tools, equipment, means of transport and other
technological devices;
Spare parts and necessary maintenance supplies for what
has been described in the previous subsection; and
Intermediate goods, raw materials, partially
manufactured goods, wrapping materials and
packaging.
Investment Entity with customs exemption should
maintain a record for machinery, equipment, devices, means of
transportation, spare parts, materials, commodities, and supplies
subject to the above mentioned exemption.

Allocation of Lands and Real Estates

Evaluation of the land and real estate allocated by the Board
which in this regard can estimate the space that can be allocated
to the applicant where they are able to customize accordingly.

Transformation of Investment Entity

Upon the merge of two investment entities (already licensed and

approved), the new entity shall benefit from the previous
rights/obligations granted already for a licensed foreign investor
forming part of the
merger;
Newly merged entity shall automatically benefit from the shorter
period of the exemption granted to any of the merged entity; and

merge

In case of demerger, each separate entity shall benefit to the

limit of the contents that exist in the divided entity.

Grievances
Board mean to be forming a formal committee that shall be
tasked with receiving complaints from stakeholders regarding
the decisions issued by the
authoritv.