WT/TPR/S/258/Rev.1 Trade Policy Review 
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II. TRADE AND INVESTMENT REGIMES 
(1) GENERAL FRAMEWORK  
1. Kuwait is a constitutional monarchy with a par liamentary system of government.  Under its 
Constitution, which entered into force in 1963, the head of the State is the Emir.  The Emir has,  
inter alia , the power to appoint the Prime Minister, dissolve parliament, initiate/sanction/promulgate 
laws, and refer bills to the parliament for considera tion.  The Council of Ministers (Cabinet) forms the 
executive level of government and advises and assi sts the Prime Minister.  The Emir appoints 
Ministers and relieves them of office upon recommendation of the Prime Minister. 
2. Kuwait has a civil law system;  Islamic law is important in personal matters.  In descending 
order of importance, the Constitution is followed by laws and their implementing documents such as 
regulations, then ministerial rulings.  There are two ways to prepare laws in Kuwait:  either through 
the Cabinet, or through members of parliament.  Through the Cabinet, bills may be drafted by any 
Ministry, and then reviewed by the Legal Advi ce and Legislation Department (FATWA).  The 
Cabinet decides whether it will approve the bill upon recommendations of the FATWA.  If the bill is 
approved by the Cabinet, it will be submitted to th e parliament (National Assembly), where it is 
reviewed by relevant committees.  After the Nationa l Assembly approves the bill, the Emir takes the 
final decision to assent to it and issues the law (within 30 days of ratification).   
3. Members of parliament may prepare and subm it draft laws to the National Assembly for 
review by relevant committees.  After the Nati onal Assembly approves the draft laws, they are 
submitted to the Emir for ratification. 
4. According to the authorities, all laws must be  published in Kuwait's Official Gazette the 
Al-Kuwait Al-Yawm .  Kuwait has notified that all trade-related investment measures, including laws, 
decrees and regulatory measures are published in the Gazette1. 
5. Kuwait’s judiciary system includes courts of fi rst instance in each administrative district, 
courts of appeals, Cassation Court (Supreme C ourt), and the Constitutional Court. Kuwait is a 
member of the GCC Commercial Arbitration Centre .  Courts generally do not exercise jurisdiction on 
cases with an expressed agreement to refer a dispute to  arbitration.  Foreign judgments are enforced in 
Kuwait on the basis of reciprocity, i.e., if the fo reign court has enforced a judgment from a Kuwaiti 
court, or if any bilateral treaties have been signe d.  Kuwait has signed such bilateral treaties with 
Egypt and Tunisia.2 
6. International agreements do not carry the force of law in Kuwait. They must be transposed 
into Kuwaiti laws to take into effect.  In case of di vergence, national laws prev ail.  However, in case 
of major divergence and upon complaints by othe r countries, national laws may be amended.  
Ratification of the WTO Agreement in Kuwait invol ved its submission to the Parliament, where it 
was reviewed by relevant committees.  It was approved by the Parliament, ratified by the Emir, and published in the Official Gazette.  Following rati fication, domestic legislation was enacted to 
implement different WTO agreements. 
7. As a Member of the Gulf Cooperation C ouncil (GCC), Kuwait applies the GCC common 
laws on customs procedures (including custom s valuation based on the WTO Agreement), 
                                                      
1 WTO document G/TRIMS/N/2/Rev.16/Add.1, 31 October 2007;  Gazette available at:  
http://www.ipd.gov.kw. 
2 Abdullah Kh. Al-Ayoub & Associates online information.  Viewed at:  http://www.al-ayoub. 
org/index.html [26/01/11]. The State of Kuwait WT/TPR/S/258/Rev.1 
 Page 11 
 
 
contingency measures, and some quarantine require ments at the border.  At the GCC level, the 
Ministerial Council, which consists of commerce a nd other ministries of each member state, is in 
charge of the law-drafting process.  In case of dive rgence, domestic laws must be revised or amended 
to be consistent with the GCC common laws.  For a GCC law to take into effect in Kuwait, Kuwait 
must issue national implementing legislation (often in the form of a 1-page decree). 
8. Most trade policies are formulated and implemented by means of laws and their implementing 
regulations.  Major trade laws are listed in Table AII.1.  Responsibility for trade policy formulation 
and implementation lies with the Ministry of Comme rce and Industry (MCI).  When formulating and 
implementing trade policies, the MCI coordinates with the Council of Ministers (the Cabinet) and 
other ministries and trade-related bodies, such as the Ministry of Finance, the Kuwait Foreign 
Investment Bureau (KFIB), the Public Authorit y for Agriculture and Fish Resources (PAAF), the 
Public Authority for Industry (PAI), and the Central Bank of Kuwait (Table AII.2). 
9. The private sector participates in trade polic y formulation through the Kuwait Chamber of 
Commerce and Industry (KCCI);  the authorities stated that the KCCI is the only channel for consultation with the private sector.  The KCCI is a non-profit, self-financed private institution.  In 
accordance with Emir Decree 1959, consulting with  KCCI on economic laws  and regulations is 
compulsory before drafting new legislation, or amending/revising existing legislation.  The KCCI 
participates in, inter alia , ministerial committees, WTO meetings, and regional trade agreement 
negotiations. 
10. The objective of Kuwait's trade policy is to help  to diversify national income, increase exports 
of Kuwaiti origin, and develop transit trade (trade through Kuwait to countries mainly in the northern 
Gulf region), through opening new markets and ma rket development in both Arab and non-Arab 
economies.
3  The authorities intend to achieve these aims by applying an open and liberal trade policy, 
and supporting open trade policies for its trading partners through, inter alia , participating in 
multilateral trade negotiations. 
(2) TRADE AGREEMENTS AND ARRANGEMENTS  
(i) World Trade Organization 
11. Kuwait became a GATT signatory on 3 Ma y 1963 and has been a WTO Member since 
1 January 1995.  In its schedule of commitm ents on goods, Kuwait bound all agricultural and 
industrial products at an MFN rate of 100%, with the exception of crude oil, petroleum, and petrol-
chemical products, which are unbound.  Kuwait sch eduled commitments in eight services sectors 
(business, construction and related engineering servi ces, distribution, environmental, health related 
and social services, tourism and travel related services, recreational and sporting services, and financial services).  It maintains two MFN exemptions under Article II of the GATS, in the areas of 
air transport services, and the promotion and protection of investment.  
12. So far, Kuwait has participated in one disput e settlement proceeding at the WTO, as a third 
party.
4  Kuwait’s trade-related notifications to the WTO are presented in Table AII.3.  Based on 
information from the WTO Central Registry of No tifications (CRN), as of 30 June 2011, Kuwait had 
22 outstanding notifications. 
                                                      
3 Ministry of Commerce and Industry (2010). 
4 Dispute DS379, United States — Definitive Anti- Dumping and Countervailing Duties on Certain 
Products from China. WT/TPR/S/258/Rev.1 Trade Policy Review 
Page 12 
  
13. As a small and trade-dependent nation, Ku wait values highly its membership in the 
multilateral trading system.  Liberal trade means gr eater access to world markets, a higher level of 
employment and a better living standard for Kuwait 's population.  The authorities considered that 
Kuwait must participate in international trade nego tiations to pursue its commercial interests, enhance 
the negotiation leverage, and protect its existing righ ts.  Furthermore, Kuwait considers it better to 
protect its rights through the WTO than through re gional and bilateral arrangements.  The authorities 
stated that for a small economy, absence from negotiations would mean Kuwait could not influence the content of the rules affecting its trade relati ons, nor ensure that its rights are fully respected. 
14. In the Doha Round, Kuwait supports a  UAE proposal that emphasizes tariff elimination for 
products of substantive interest to developing count ries.  In particular, Kuwait considers that the 
primary aluminium industry, which is one of the most important emerging industries in some GCC 
countries, would benefit from tariff eliminations as suggested in the UAE proposal.
5  In the area of 
intellectual property rights, Kuwait does not import or export any alcohol, for religious reasons, and 
considers that participation in the registration sy stem for GIs should be voluntary and without any 
legal effect.6 
15. In September 2010, Kuwait joined the WTO In formation Technology Agreement.  Kuwait is 
not a party, nor an observer, to the WTO plur ilateral Agreement on Government Procurement. 
(ii) Regional trade agreements 
16. Kuwait's view is that regional trade agreemen ts and arrangements should be complementary, 
and not compete with the multilateral trading sy stem.  They should be building blocks for 
liberalization of international trade and must be in conformity with the provisions of Article XXIV of 
the GATT 1994, the Enabling Clause, and Article V of GATS. 
17. Kuwait participates actively in regional trade ag reements through its membership in the Gulf 
Cooperation Council (GCC) and the Greater Arab Fr ee Trade Area (GAFTA).  As a group, the GCC 
has signed free-trade agreements with the EFTA stat es and Singapore (Table II.1), and is preparing to 
review the legal text of an FTA with New Zealand.  It has ongoing ne gotiations with Australia, China, 
the EU, India, Japan, Korea, MERCOSUR, Pakistan, and Turkey.  Further, the GCC has received 
requests for FTA negotiations from ASEAN, Azerba ijan, Cambodia, COMESA (Common Market for 
Eastern and Southern Africa), UEMOA  (West African Economic and Monetary Union), Georgia, 
Hong Kong, China, Indonesia, Malaysia, Peru, Philippines, Thailand, Ukraine, and Viet Nam. 
18. In the resolution of the first Arab Economic  and Development Summit held in Kuwait in 
January 2009, Arab countries decided to create an Arab Customs Union, and accomplish all the 
necessary requirements by 2015, with the objec tive of establishing an Arab common market. 
19. However, all current negotiations of free-trad e agreements have been suspended.  In 
September 2010, the GCC decided that negotiations  need to be on hold pending completion of an 
internal study.  According to the authories, this st udy is in its final stage, and is expected to be 
submitted to the GCC Ministerial Council for consideration before end 2011. 
                                                      
5 WTO document TN/MA/M/13, 6 August 2004. 
6 WTO document TN/IP/M/19, 19 July 2008. The State of Kuwait WT/TPR/S/258/Rev.1 
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Table II.1 
Overview of Kuwait's regional trade agreements, October 2011 
GCC Agreement in force 
Title Gulf Cooperation Council (GCC) 
Parties Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates 
Coverage and type Goods and services, customs union 
Date of signature/entry into force Free-trade agreement a dopted in March 1983, Economic Agreement adopted on 31 December 
2001, Customs Union effective 1 January 2003, and Common Market launched on 1 January 
2008 
Transition for full implementation 
(goods) The transition period  expires by 2015 
Kuwait-specific exclusions No 
Services covered Yes 
Kuwait's merchandise trade (2009) 11% of Kuwait's imports were fr om other GCC member states, a nd 2% of its exports went to 
other GCC member states in 2009 
WTO document series WT/REG276, and WT/COMTD/N/25 
GAFTA Agreement in force 
Title Greater-Arab Free Trade Area Agreement 
Parties Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libyan Arab Jamahiriya, Morocco, Oman, 
Qatar, Saudi Arabia, Sudan, Syrian Arab Re public, Tunisia, United Arab Emirates, Yemen, 
and later joined by the Palestinian Authority of the West Bank and the Gaza Strip, and 
Algeria 
Coverage and type Goods, free-trade agreement 
Date of signature/entry into force 19 February 1997/1 January 1998 
Transition for full implementation 
(goods) 10 years, but shortened to 8 years (full implementation realized in 2005 instead of 2007) 
Main products excluded from 
liberalization (Kuwait) Some products excluded for health, religious, or security reasons  
Services covered On-going negotiations  among Kuwait, Egypt, and Jordan 
Kuwait merchandise trade (2010) 13% of Kuwait's imports were fr om other GAFTA member states, and 3% of its exports went 
to other GAFTA member states 
WTO document series WT/REG223 
GCC –EFTA  Agreement signed but not in force  
Title EFTA–GCC 
Parties GCC 6 members, and Iceland,  Liechtenstein, Norway, Switzerland 
Coverage and type Goods and services, free-trade agreement 
Date of signature FTA signed on 22 June 2009 
Date foreseen to enter into force 2011, pend ing completion of internal procedures by the parties.  According to the authorities , 
Kuwait ratified in 2011 
Transition for full implementation (goods) 10 years 
Services covered Yes 
Main products excluded from 
liberalization (Kuwait) Includes:  mixtures of odoriferous substances, retreaded or used pneumatic tyres of rubber, 
hides and skins of swine;  prohibited items include mainly cocaine and crocidolite, and 
materials containing asbestos 
GCC merchandise trade (2010) 1.6% of GCC’s imports were fr om the EFTA, and 0.0% of its exports went to the EFTA 
Table II.1 (cont'd) WT/TPR/S/258/Rev.1 Trade Policy Review 
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GCC –Singapore Agreement signed but not in force  
Title Singapore–GCC 
Parties GCC 6 members, and Singapore 
Coverage and type Goods and services, free-trade agreement  
Date of signature 15 December 2008 
Date foreseen to enter into force Not in force, although Kuwait ratified in 2011 
Transition for full implementation 
(goods) 5 years 
Main products excluded from 
liberalization (Kuwait) Some products excluded for health , safety or religious reasons  
Services covered Yes 
GCC merchandise trade (2010) 0.5% of GCC’s imports came fr om Singapore, and 0.1% of its exports went to Singapore 
 
Source:  WTO Secretariat;  WTO RTA Da tabase;  and information provide d by the Kuwaiti authorities. 
(a) Gulf Cooperation Council (GCC) 
20. The GCC was created on 25 May 1981, by Bahrai n, Kuwait, Oman, Qatar, Saudi Arabia, and 
the United Arab Emirates.  The main objectives we re regional cooperation a nd integration in all 
economic, social, and cultural affairs, including tr ade, industry, investment, finance, transport, 
communications, and energy.  One of the GCC's fi rst achievements was an agreement for free trade 
among member states in 1983, whereby originating goods have been exempt from customs tariffs. 
21. An Economic Agreement between the GCC Stat es, adopted on 31 December 2001, replaced 
the 1981 agreement.  This Agreement aims at enhancing and strengtheni ng economic ties among 
member states, and harmonizing their economic, fina ncial, and monetary policies, their commercial 
and industrial laws, and their customs regulati ons.  Based on the Economic Agreement, a GCC 
Customs Union was launched in 2003,7 and includes:  (1) a common ex ternal customs tariff;  (2) 
common customs regulations and procedures;  (3) a single-entry system where customs duties are collected;  (4) elimination of all tariff and non-ta riff barriers within the GCC, while taking into 
consideration domestic laws on agri cultural and veterinarian quaran tine, as well as rules regarding 
prohibited and restricted goods;  and (5) national treatment for goods produced in any GCC member state.  Practical implementation of the customs uni on lagged behind in certain areas, particularly non-
tariff measures.  The authorities stated that GCC me mber states are working to harmonize all customs 
procedures within the next three years, to have it fully operational by 2015. 
22. Kuwait applies the GCC common external tariff of 0% and 5% for most products, and 100% 
and a specific duty for tobacco products (Chapter III(1)(ii)).  As a result of implementing the GCC 
common tariff, Kuwait's simple average applied MF N tariff was reduced from 7.7% in 2002 to 4.8 % 
in 2011 . 
23. A GCC common market, launched on 1 January 20 08, removed all barriers to cross-country 
investment and services trade.  In particular, Mi nisterial Decree No. 272 of 2008 specifies that all 
GCC citizens are allowed to exercise all economi c activities and occupations in Kuwait as Kuwaiti 
nationals, except:  immigration and Umrah services;  commercial agencies;  opening printing presses 
and publishing houses;  and issuance of newspapers  and magazines.  In most cases, the GCC 
negotiates bilateral FTAs as a group, although some  GCC members (e.g. Bahrain and Oman) have 
agreed individual FTAs with the United States. 
                                                      
7 WTO document WT/REG276/N/1/Rev.1, 17 November 2009. The State of Kuwait WT/TPR/S/258/Rev.1 
 Page 15 
 
 
24. On 15 December 2009, Bahrain, Kuwait, Qatar, and Saudi Arabia announced the creation of a 
Monetary Council.  This aims to  increase technical cooperation betw een the four states on monetary 
policy, although a single currency is not expected in the near future.  The GCC Monetary Council 
Board had its first meeting in March 2010.  The Co uncil is working on comple ting its institutional and 
organizational structures.  Member countries are working towards improving and coordinating 
monetary, banking, and financial statistics. 
(b) GAFTA 
25. The Greater-Arab Free Trade Agreement entered in to force on 1 January 1998.  Its members 
include the six GCC countries, as well as Egypt, Ira q, Jordan, Lebanon, Libya, Morocco, Palestinian 
Authority, Sudan, Syria, Tunisia, and Yemen.  In 2005, Algeria participated as the 18th member.  
GAFTA contains provisions relating to trade in goods .  Duties and other restrictions on substantially 
all trade between the signatories were to be eliminat ed by 31 December 2007;  in practice duties on all 
products were eliminated as of 1 January 2005.8 
26. According to the authorities, all non-tariff borde r restrictions have been eliminated.  The 
authorities stated that GAFTA aimed at achieving full liberalization of trade in products of national 
origin among Arab countries.  To deepen and broa den economic integration, member countries are 
working on liberalizing trade in services, with an aim of establishing an Arab Customs Union and an 
Arab Common Market.  Data provided by the au thorities show that between 2004 and 2008, trade 
among Arab countries grew rapidly, although the shar e of inter-Arab trade to GDP declined, and the 
share of inter-GAFTA trade to total Arab-foreign trade was stable (Table II.2). 
Table II.2 
GAFTA trade, 2004-08 
(US$ billion) 
 2004 2005 2006 2007 2008 
Value of inter-GAFTA trade 68 92 112 135 165 
Ratio of inter-GAFTA trade to GDP (%) 39 35 22 21 22 
Total Arab-foreign trade 691 909 1,082 1,323 1,752 
Growth rate of Arab foreign trade (%) 33 32 19 22 32 
Inter-GAFTA trade/ total Arab-foreign trade (%) 9.8 10.1 10.3 10.2 9.4 
 
Source : Information provided by the Kuwaiti authorities. 
(c) GCC–EFTA 
27. Trade between the European Fr ee Trade Association (EFTA) and GCC grew rapidly, on 
average 25% annually, between 2003 and 2008.  A Free Trade Agreement was signed in June 2009, 
covering trade in goods and services, competition, go vernment procurement, and intellectual property 
rights.  GCC and each EFTA state concluded bilate ral agreements on trade in agricultural products.  
These agreements form part of the instruments es tablishing the free-trade area.  According to the 
authorities, the EFTA–GCC Agreement has not entered into force, although Kuwa it ratified it in 2011. 
28. Under the Agreement, EFTA states shall abolish all customs duties on imports originating 
from GCC, and GCC countries shall abolish all cu stoms duties on imports originating from the EFTA 
states, except those listed in Annex VI.9 In accordance with Annex VI, GCC would eliminate duties 
after a five-year transition period on 37 lines at HS  8-digit level (category B), and prohibit the 
                                                      
8 WTO document WT/REG223/N/1, 20 November 2006. 
9 EFTA online information.  Viewed at:  http:// www.efta.int/free-trade/free- trade-agreements/gcc/rou-
annexes-letters.aspx [27/01/11]. WT/TPR/S/258/Rev.1 Trade Policy Review 
Page 16 
  
importation of 7 lines (mainly cocaine and crocido lite, and materials containing asbestos).  Another 
11 lines are not covered by this agreement;  th ese include mixtures of odoriferous substances, 
retreaded or used pneumatic tyres of rubber, and hides and skins of swine. 
29. The agreement has a chapter on services, which cl osely follows the GATS approach:  all four 
modes of supply of services are covered, and all services sectors are addressed.  On the other hand, 
the agreement does not contain specific provisions on investment.  The parties agreed to negotiate on 
business establishment in non-services sectors within two years after the entry into force of the 
agreement. 
(d) GCC–Singapore10 
30. The GCC–Singapore FTA, signed on 15 December  2008, covers trade in goods, rules of 
origin, customs procedures, trade in services, and go vernment procurement.  This agreement has not 
entered into force yet, although Kuwait ratified it in 2011.  Under the Agreement, GCC countries 
abolish customs duties on 99% of Singaporean exports, with key benefiting sectors comprising 
telecommunications, electrical and electronic equipm ent, petrochemicals, jewellery, machinery, and 
iron and steel-related industry.  Tariffs are either  eliminated immediately, or after a five-year 
transition period.  The remaining 1% of Singapor e's exports are prohibited from entering the GCC 
market for health, safety, security and religious reasons. 
31. GCC and Singapore agreed to liberalize various services sectors beyond their WTO 
commitments;  in particular, Singaporean service suppliers enjoy preferential access in professional services such as legal, accounting, and engineeri ng services, as well as business services, such as 
construction, distribution, and hospital services.  Si ngaporean suppliers are also given the same price 
preference of 10% that is given to GCC dom estic suppliers for government procurement 
(Chaper III(3)(iii)). 
32. Kuwait and Singapore concluded an Agreemen t for the Encouragement and Reciprocal 
Protection of Investment in November 2009. 
(e) Other bilateral or preferential trade agreement 
33. Kuwait has signed a number of economic and commercial agreements with its trading 
partners, of which, 33 were trad e cooperation agreements intended to  promote and diversify bilateral 
trade in goods and services, such as by providing ne cessary facilities to participate in trade fairs and 
international markets (Table AII.4).  The auth orities stated that these agreements contain no 
discriminatory or preferential commitments. 
34. Kuwait benefits from the Generalized System of Preferences (GSP) of the EU.  It does not 
participate in the Global System of Trade Preferences (GSTP). 
(3) F
OREIGN INVESTMENT REGIME  
35. Kuwait has relaxed its foreign capital equity r estrictions since 2001 by allowing 100% foreign 
ownership in 13 sectors.  The Government considers that foreign participation tends to encourage a 
more active private sector, which could help to di versify the economy.  However, despite the tax 
incentives given to foreign companies and the rela xation of foreign equity restrictions, foreign 
investment in Kuwait remains low.  Foreign companies are subject to a corporate income tax, which is 
                                                      
10 Singapore Government online information.  Viewed  at:  http://www.fta.gov.sg/fta_gsfta.asp?hl=32  
[04/04/2011]. The State of Kuwait WT/TPR/S/258/Rev.1 
 Page 17 
 
 
not levied on Kuwaiti (and GCC) companies.  Also, foreign investors have to go through complicated 
procedures to obtain licences.  The Government is  evaluating a possible amendment to its foreign 
investment law. 
(i) Legislative and regulatory framework 
36. Major legislation relating to foreign investme nt in Kuwait includes the Commercial Code, and 
Law Regulating Direct Foreign Capital Investment  (Law No. 8 of 2001) (Foreign Investment Law) 
(Table AII.1). 
37. The basic principles for carrying out business in  Kuwait are provided in Articles 23 and 24 of 
the Kuwaiti Commercial Code.  Article 23 stat es that non-Kuwaiti citizens may not pursue any 
commercial activities in Kuwait unless they have a Kuwa iti partner.  This partner’s share must not be 
less than 51% of the company's capital.  Article 24 provides that a foreign company may not establish 
a branch in Kuwait and may not pursue commerc ial activities in Kuwait, unless it has a Kuwaiti 
agent.11 
38. The authorities do not consider Kuwait to have  been very successful in attracting foreign 
direct investment.  The Government decided that  Kuwait needs to diversify its economy away from 
oil.  It considers that future growth and divers ification require an active private sector, and that 
foreign participation and involvement will encourage this.  On 22 April 2001, the Parliament enacted 
the Foreign Investment Law, aiming to attract fo reign investment by lifting or removing foreign 
ownership limits.  This Law gives an exception to the basic principle in the Commercial Code, by 
allowing foreigners to own up to 100% of busin ess entities in certain sectors, provided a licence is 
issued by the Minister of the Ministry of Commerce and Industry.  These sectors are: 
 industries other than oil and gas exploration and production; 
 construction, operation and management of infrast ructure enterprises in the fields of water, 
 power, drainage, and communications; 
 banks, investment corporations, and foreign ex change companies that the Central Bank of 
 Kuwait agrees to consider incorporation thereof; 
 insurance companies that Ministry of Co mmerce and Industry agre es to incorporate; 
 information technology and software development; 
 hospital and medicines manufacturing; 
 land, sea, and air transport; 
 tourism, hotels, and entertainment; 
 culture, information, and marketing except fo r issuance of newspapers, magazines, and 
 opening of publishing houses; 
 integrated housing projects and zones devel opment except for real estate speculation; 
                                                      
11 Kuwait Foreign Investment Bureau online information:  "Investors Guide".  Viewed at:  
http://www.kfib.com.kw/kfibclient/clientpages/Index.aspx?id=64 [10.01.2011]. WT/TPR/S/258/Rev.1 Trade Policy Review 
Page 18 
  
 real estate investment through foreign inv estor subscription to the Kuwaiti shareholding 
 companies according to the provisions of law No. 20/2002; 
 storage and logistic services; 
 environmental activities.12 
39. Foreign investors may establish companies in Ku wait, either as a limited liability company 
(WLL), or a Kuwait shareholding company (KSC) (closed or public) (Table II.3). 
Table II.3 
Requirements for establishing a foreign-invested company in Kuwait, 2010 
 Limited liability company 
(WLL) Kuwait shareholding company (KSC) 
Closed Public 
Foreign ownership 
restrictions Foreign entities may hold a 
maximum shareholding of 49% Only Kuwaiti citizens may be 
shareholders of a joint-stock company, foreigners may own 
up to 49% of the share capital 
after approved by the MCI Foreign shareholders do not 
need to obtain licence to acquire shares, and may be 
allowed more than 49% of 
ownership 
Process to form a 
company Simple, 3 months 3 months 3 months 
Minimum capital 
requirement KD 7,500 KD 37,500 KD 37,500;  or KD 75 million 
for banks, KD 10 million for 
insurance companies 
Restrictions May not  engage in banking 
and insurance activities; 
may not list on the KSE 
(Kuwait Stock Exchange) May not engage in banking 
and insurance activities May engage in banking and 
insurance activities 
Corporate income tax No Tax levied on profits made by 
the foreign company as a 
shareholder in the KSC Tax levied on profits made by 
the foreign company as a 
shareholder in the KSC 
Zakat No 1% of profit 1% of profit 
KFAS (Kuwait Foundation for the Advancement of 
Science) No 1% of profit 1% of profit 
Kuwait National 
Labour Support Tax No No 2.5% of profit 
Other requirements At least 10% of profit must 
be transferred to a statutory 
reserve until it totals at least 50% of capital At least 10% of profit must be 
transferred to a statutory 
reserve until it totals at least 50% of capital At least 10% of profit must be 
transferred to a statutory 
reserve until it totals at least 50% of capital 
Total number of foreign invested companies in Kuwait in 2010:  WLLs with foreign 
investment in 2003-10: Closed KSCs with foreign 
investment in 2003-10: Public KSCs with foreign 
investment in 2003-10: 
12 0 9 0 
 
Source:  Information provided by the Kuwaiti authorities. 
40. However, despite the relaxation of foreign owne rship requirements, fore igners do not usually 
own more than 49% of a company in Kuwait.  In accordance with Council of Ministers Resolution 
No. 1006/2 of 2003, a licence may be issued to a closed KSC in which th e share of the foreign 
investor is 100% of its capital, subject to:  (1) th e company's capital must be sufficient to achieve its 
objectives and must be fully subscribed to by the founders;  (2) the company must fulfil the 
procedures, rules, and regulations prescribed unde r the Kuwaiti Commercial Companies Law (No. 15 
of 1960);  (3) the company must engage in one of  the sectors as listed above, and must pursue one or 
                                                      
12 Council of Ministers’ Resolutions No. 1006/1, 2003, No. 738/9, 2008, and No. 1067/8, 2009. The State of Kuwait WT/TPR/S/258/Rev.1 
 Page 19 
 
 
more of the following objectives:  transfer of modern technology and administration of practical, 
technical, and marketing expertise;  expansion and participation of th e Kuwaiti private sector;  
creation of job opportunities for national labour and c ontribution to training;  and support of national 
products exports. 
41. Foreigners may enter and conduct business in Kuwait through joint-venture agreements, 
appointing a Kuwaiti commercial agent, or appointing a Kuwaiti commercial representative.  Joint ventures are established by contractual agreements.  They provide parties with more flexibility and are 
more common in relation to specific projects with  a limited term.  Joint-venture companies do not 
have legal personalities and cannot be  registered with the MCI.  A joint-venture may transact business 
with third parties only through one venturer, who is  personally liable for the transactions he enters 
into with third parties.  If the transacting ve nturer is a non-Kuwaiti, the Kuwaiti venturer in the 
company must guarantee him in that transaction.
13 
42. A very popular business vehicle in Kuwait is the commercial agent.  Only Kuwaiti citizens 
may act as commercial agents in Kuwait (with the exception of financial services).  A foreign entity 
that opens an office in Kuwait, and acts through a Kuwaiti agent, must carry out operations in the 
latter’s name.  Commercial agents are protected by  various laws and regulations:  they must be 
registered with the MCI;  Kuwaiti law is the governi ng law;  foreign principals may not terminate an 
agreement without proving breach of contract by  the agent, unless the foreign principal pays 
compensation;  foreign principals may not refuse to renew the agency agreement when it expires;  the 
agent may sue both the foreign principal and any new agent that the former may appoint if the 
termination is proved to be the result of their concerted action. 
43. Similar to the agent arrangement, a foreign entity may appoint a commercial representative 
who is a Kuwaiti individual or entity to represent it s business interests in Kuwait.  The representative 
may be engaged, compensated, and terminated as agreed by the parties of the commercial 
representation agreement. 
44. Only Kuwaiti courts are competent to consider  disputes arising between foreign invested  
enterprises and third parties.  The parties may agr ee to refer a dispute to arbitration.  Foreign 
enterprises may not be confiscated or nationalized;  expropriation may only occur for public interest, 
with compensation equivalent to the enterp rise's real economic value at that time. 
45. The KFIB is evaluating a possible amen dment to the Foreign Investment Law.14  T h e  
Government realizes that, despite various tax incentives and the relaxation of foreign equity 
ownership, foreign companies still report delays in  getting approvals to operate in Kuwait, and the 
Foreign Investment Law does not appear to have changed the investment climate in any significant 
way.  The authorities have identified six major obstacles to FDI (Table II.4). 
46. Amendment to the Foreign Investment Law w ould focus on removing the overlap in agency 
arrangement for license issuance, by establishing th e KFIB as an autonomous institution.  KFIB is 
working on setting up a "one-stop shop" for foreign i nvestors, which will provide foreign investors a 
single point of contact with the Government.  Accord ing to the authorities, the one-stop shop is to be 
established in the near future.  Apparently, land is also an issue of concern to foreign investors.  
According to the authorities, land is a concern as mo st land zones lack infrastructure and thus are not 
                                                      
13 Abdullah Kh. Al-Ayoub & Associates online info rmation.  Viewed at:  http://www.al-ayoub. 
org/index.html  [26/01/11]. 
14 KFIB (2011). WT/TPR/S/258/Rev.1 Trade Policy Review 
Page 20 
  
available to investors.  To address this issue,  KFIB is now in charge of 3 zones to ensure land 
availability for foreign investors.15 
Table II.4 
FDI obstacles and proposed solutions, 2011 
Obstacles Proposed solutions 
1. Failure of competent government authorities to express 
 their views as quickly as required to investors - Reduce overlap between government authorities, simplify 
 procedures and complete them electronically - Oblige the competent government  authorities to express their 
 views during a specific period 
- Set up e-government - Provide a data base reflecti ng Kuwait's development plan 
2. Currently, under Law No.8 of 2001, it takes 8 months to 
 grant licences to a foreign-invested project - Modify some articles of Law No. 8 of 2001, to minimize the 
 decision period 
3. Inadequacy of the current regulatory framework - Esta blish a financial administrative association for FDI in 
 Kuwait 
- Establish a one-stop shop to facilitate investment 
 procedures 
- Establish external repres entations of the Foreign 
 Investment Office, and visit foreign countries where  investment originates 
4. Lack of clarity and transp arency in terms of economic 
 activities and projects which ma y be practiced by foreign 
 investors - Clarify Ministerial decree No.1/1006 of 2003 
 concerning the activities a llowed and determining the 
 investment opportunities Kuwait needs 
5. Difficult, out of date, and long procedures to apply and 
 obtain licenses - Minimize the data and docum ents required for investment 
 licence 
6. Difficulties with regard to the investors' entry into, residence 
 in, and departure from Kuwait - Coordinate with competent au thorities to facilitate the entry 
 and residence of company members and investors 
- Help foreign investors to obtain a visa to enter Kuwait 
 through its embassies abroad - Establish an office to receive investors at Kuwait airport 
 
Source : Kuwait Foreign Investment Bureau.  
(ii) Direct taxation and incentiv es for foreign investment 
47. Foreign companies are subject to a corporate in come tax, which is not levied on Kuwaiti (or 
GCC) companies.  Some other taxes and contribut ions are imposed, although foreign companies may 
benefit from various tax or non-tax incentives. 
48. Individuals (Kuwaiti and foreign nationals), a nd Kuwaiti companies do not pay income tax.  
However, a corporate income tax is levied on prof its made by foreign-invested companies according 
to their share in the KSC (Kuwait shareholding co mpany).  In 2007, Kuwait amended its Corporate 
Tax Decree, and the new tax decree entered into fo rce in February 2008:  for tax periods beginning 
after 2 February 2008, a 15% flat rate tax app lies on earnings above KD 5,250 per year (previously, 
income tax ranged between 5% and 55%). 
49. Gains from trading in securities on the KSE (Kuwait Stock Exchange) are exempt from tax.  
There is no withholding tax.  However, investme nt funds, investment custodians, and companies 
managing portfolios for foreign entities are required to deduct 15% (or the appropriate percentage 
applicable under a double taxation avoidance treaty) of the foreign entity’s share of profits and 
dividends.  Also, all government departments, entit ies, and individuals making payments to parties 
with whom they have entered into contracts, agre ements or transactions are required to withhold 5% 
                                                      
15 According to the authorities, the KFIB is currently  finalizing the terms of reference and structural 
plans to grant the project to a consulting firm to propose feasibility studies;  the zones are expected to be set up in 2 years. The State of Kuwait WT/TPR/S/258/Rev.1 
 Page 21 
 
 
of such payments as tax retention.  The par ties may recover the retained amount, but only after 
submitting a tax retention release letter issued by the tax department. 
50. Under the Zakat  Law No. 46 for 2006 (Law Regarding Zakat and Contribution of Public and 
Closed Shareholding Compan ies in the State’s Budget), zakat  (tax according to the Islamic Sharia 
principles) is levied on all Kuwaiti shareholding companies at 1% of their net annual profit. 
51. Currently 67% of the Kuwaiti labour force work s in the Government sector.  The National 
Labour Support Law (Law No. 19 of 2000) was enact ed to support and encourage the national labour 
force to work in the non-government sector.  The Law obliges the Government to share the cost of 
labour-force training.  To cover the cost, Kuwaiti (public) shareholding companies listed in the KSE 
must pay the national labour support tax, am ounting to 2.5% of their net annual profits. 
52. In addition to taxation, each KSC company must  pay 1% of its net profits to the Kuwait 
Foundation for Advancement of Scie nce (KFAS), which was establishe d to assist science students and 
researchers in their education and training for scien tific research and development.  According to the 
Government's online information, a KSC company is not  strictly obliged to pay to KFAS;  however, it 
has become general practice.16 
(iii) Incentives and institutional framework 
53. Foreign companies may be exempted from inco me tax or any other taxes for a maximum of 
ten years from starting actual operations of the enterp rise.  Also, they may be exempted from customs 
duties on imports of: machinery, equipment, and spar e parts required for construction, expansion, and 
development;  raw materials, semi-processed goods , wrapping and packaging materials, and such 
other materials required for production purposes. 
54. Not all foreign companies may be exempted from tax for ten years:  the period of exemption 
is determined by the Foreign Capital Investment  Committee (FCIC).  The Chairman of the Committee 
is the Minister of Commerce and Industry, and its  members include experts representing the private 
sector as well as the Kuwait Chamber of Commerce. 
55. The executive body of the FCIC is the Kuwait Foreign Investment Bureau (KFIB).  KFIB 
receives applications from foreign investors, conducts studies on these applications and makes 
suggestions to the FCIC.  Upon recommendations by the FCIC, the Minister of the MCI issues a commercial licence to the foreign investor, after wh ich the KFIB issues an investment licence.  
According to the authorities, both licences must be issued within a maximum of four  months from the 
date of application (which can be extended by another four months).  In case of rejection, the decision 
must be justified in writing. 
56. When deciding tax incentives, the FCIC follows  a "proportional weight schedule";  depending 
on the different components, foreign companies may obtain different "weight values" (Table II.5).  
Enterprises with a "weight value" between 50% a nd 64% are exempted from tax for five years;  
between 65% and 79% the exemption is for eight y ears;  and between 80% and 100% for ten years.  
Depending on the documents presented to the FCIC, tax exemptions might be granted for less than 
five years.  All exemptions commence from the date of actual operation of the enterprise. 
                                                      
16 Kuwait Government online information.  Viewed at:  http://www.e.gov.kw/sites/kgoenglish/portal/ 
Pages/Visitors/DoingBusinessInKuwait/Gov erningBody_OverView.aspx  [25/01/11]. WT/TPR/S/258/Rev.1 Trade Policy Review 
Page 22 
  
Table II.5 
Proportional weight schedule for FDI, 2011 
Basic components Weight Notes 
1.  Technology, modern management methods, practical, 
operational, technical and marketing experience (20%) 
 20%  
2.  Job creation for national labour force: 
- Share of national labour force (35%) 
- Training of national labour force (10%) 
 45% Senior management:  
General manager, assistant general 
manager, sector manager, etc. 
 Middle management (supervisory):  
Department Head, supervisor, 
observational manager, etc.  
Administrative personnel: 
Dealer, seller, services provider, etc.  
- Internal training: (5%);  
- external and internal training (10%)  
3. Enhance and strengthen the Kuwaiti private sector (15%) 
- Share of local equity (5%) 20% The enterprise contributes in activating: 
- 5 sectors, 5%; - 6-9 sectors, 10%; 
- 10 sectors or more, 15%. 
Equity share of local partner should not be 
more than 35% of enterprise’s capital 
 
4. Support the economic development plans and targeted sectors 
-  (10%)a 
 10% Taking into consideration the nature of the 
enterprise and the Economic Development Plans 
5. Location (undeveloped areas) (5%)  
 5%  
Overall weight of FDI enterprise 100%  
 
a Sectors identified in the Development Plan. 
 
Source:  Kuwait Foreign Investment Bureau. 
(iv) Double taxation arrangements 
57. The authorities consider that double taxation a voidance (DTA) agreements and investment 
promotion agreements promote investment thr ough creating favourable conditions for economic 
cooperation, and removing fiscal obstacles and reduc ing uncertainties.  In March 2011, Kuwait had 
signed 73 DTAs, of which, 46 had been ratified (Tab le AII.5).  Kuwait has also initialled 14 bilateral 
DTA agreements, and is negotiating with another 17  trade partners.  Kuwait has signed 74 bilateral 
investment agreements to protect and encourage inv estment, of which, 56 have been ratified.  Kuwait 
has initialled agreements with 15 trade part ners, and is negotiating with 6 others.