Unlike Qatar, Dubai and Abu Dhabi, Kuwait is still uncharted territory for many Western companies.
Doing Business in Kuwait
Enterprise in Kuwait does not certainly come without its difficulties, but can most definitely pay off. It is a small, but prosperous nation, with a key location in the Middle East between the major powers of Iran and Saudi Arabia, and, above all, the stable and safe neighbour of oil-rich Iraq. Unlike Qatar, Dubai and Abu Dhabi, Kuwait is still uncharted territory for many Western companies.
Kuwait is the hottest place on Earth, with temperatures reaching up to 50 degrees in the summer months! It is relatively densely populated and an outstanding logistical hub in the Gulf Region.
The simplest way of doing business in Kuwait is via a so-called WLL, which is comparable with the Dutch BV. This entity can have between 2 and 50 shareholders. In principle, at least 51% of the shares must be in the hands of Kuwaitis, but there are conditional exceptions possible to this rule, with the permission of the Kuwait Direct Investment Promotion Authority. In such cases, 100% foreign (Dutch) possession is conceivable. DTS has good connections in Kuwait, and can be of assistance when applying for this derogation.
Another means of doing business in Kuwait is via a local agent, or “sponsor”, – whereby the word “sponsor”, of course, means that the foreign entrepreneur sponsors the local representative. This modus operandi is often the best way of penetrating the local market.
In Kuwait, there exists, as in most other nations in the Arab world, a Free Trade Zone, where foreign entrepreneurs can, in theory, freely and tax-free, trade in certain sectors. Permits for this zone are, however, subject to numerous conditions and difficult to obtain.
The taxation system in Kuwait is not uncomplicated. Rates are usually considerably lower than in the Netherlands (in the region of 15%), but, if you are new in Kuwait, the system can sometimes randomly get on top of you. Therefore, it is essential that you be well informed by a local adviser. We have local partners that you can trust. The Netherlands has a good taxation treaty with Kuwait, thus the risk of double taxation is small. Furthermore, there is a bilateral investment treaty between the Netherlands and Kuwait, so that Dutch entrepreneurs and investors are, to a large extent, protected against expropriations.
We can advise you about the application of the taxation treaty with Kuwait. Would you like to know more about doing business, investing and enterprise in Kuwait? If so, why not contact us?
Tagsdoing business internationally
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