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Kuwait does not have an income tax system for its citizens, nor does Kuwait collect income tax from foreigners employed by companies or business within the country. Individuals employed by a Kuwaiti company should carefully research whether or not they are required to pay income tax in their respective homeland.

VAT

Kuwait does not have a VAT system.

While it may be less expensive to operate a commercial business in Kuwait, the amount of time, money and energy necessary to set up a firm can take many years. Per Kuwaiti Law, foreign individuals or entities are permitted to establish a permanent presence in Kuwait by forming and investing in the following Kuwaiti companies:

• Limited Liability Company (WLL)
• Closed Joint Stock Company (KSC Closed)
• Joint Stock Company

Limited Liability Company

Foreign individuals and corporations can establish a Limited Liability Company (WLL) in Kuwait. However, Article 191 of the Companies Law, the share of the Kuwaiti citizen in the WLL company cannot be less than 51%. The process is simple, and it takes around three months. This type of company provides a limited liability shield. Because Kuwaiti citizens pay no individual income tax, and only non-Kuwaiti corporate bodies pay corporate tax, WLL companies avoid paying any taxes.

Closed Joint Stock Company

Another type of company that can be created by non-Kuwaiti entities is Closed Kuwaiti Joint Stock companies (KSC Closed). In accordance with Kuwaiti Companies Law, Articles 68 and Article 94, KSC Closed companies are classified as Joint Stock Companies. Under this rule, only Kuwaiti citizens may be shareholders of a joint stock company. However, foreigners may own up to a maximum of 49% of the share capital of a Closed Joint Stock company (KSC Closed). Activities of KSC Closed companies may not include banking or insurance. The process of forming a KSC Closed company is about six months.

In addition to the taxes levied on profits made by the foreign company, the KSC Closed Company is required to contribute 5% to the Kuwait Foundation for the Advancement of Science.

Joint Stock Company

In June of 1999, Kuwait passed a law permitting non-Kuwaitis to hold shares in publicly traded shareholding companies. Under the terms of new law, certain restrictions apply and are defined by the Minister of Commerce and Industry. Among these regulations is the maximum amount of shares which non-Kuwaitis may hold.

Further information on Kuwaiti Tax Law can be found at E.Gov Kuwait (in Arabic). Additional information on setting up a business in Kuwait is available at Kuwait Chamber of Commerce and Industry.