New controls for the foreign investor to obtain benefits and exemptions in Kuwait

The Kuwait Direct Investment Promotion Authority (KDIPA) adopted a new decision, on the controls for investment entities’ access to benefits and exemptions, provided by the Authority to foreign investors licensed to operate in Kuwait, Arabic daily Al Qabas reported

The decision stated:

Article One: “The investor may apply for an investment license application, and grant benefits in accordance with the provisions of Law 116 of 2013 referred to, and the applicant investor to establish an investment entity is required to meet the criteria issued in the mechanism of evaluating license applications and granting the approved benefits in the Authority.”

Second Article: “Investment entities licensed in accordance with the provisions of Law No. 116 of 2013 referred to, which is not less than the date of their actual start-up of one year, may apply to the Authority to grant benefits and exemptions in accordance with the following conditions and controls:

1. The mechanism of evaluating license applications and granting issued benefits approved by the Authority is applied.
2. Submit periodic reports, indicating the commitment of licensed investment entities to the pledges and criteria specified within the business plan submitted according to the period of time.
3. Provide a detailed business plan highlighting the achievements achieved since the beginning of the actual operation of the licensed investment entity, while setting future goals.
4. The exemption shall be written from the date of submission of the application for granting benefits, after the completion of the required documents and the payment of the prescribed fees, and this exemption does not include any pre-paid amounts for strike and customs duties.

Third Article: Special provisions and controls for the investor and investment entities, which apply for benefits and exemptions in accordance with the provisions of Law No. 116 of 2013, synchronized with the application for an investment license, or subsequent to the investment license, and which have contracts or projects submitted their bids before submitting the application, whether from the government or the private sector.

• Commitment to achieving the Authority’s standards, contrary to the obligations recognized by the investor or the investment entity in the terms of the contract.
• The exemption granted by the Authority will not include ongoing contracts or projects, which submitted their bids before submitting the application, in addition, the exemption does not apply to these contracts and projects, even if they are transferred or assigned to another entity later.
• The investment entity, which obtains the investment license, and benefits from the benefits, is required to maintain independent financial accounts of the investment entity, and away from any contracts signed.
• Benefits and exemptions granted by the Authority will not include any tax-and fees.

Fourth Article: Companies and investment entities committed to the Offset Program in Kuwait are not allowed to benefit from the benefits and exemptions issued in Law No. 116 of 2013 referred to during the commitment period.

The advantages

KDIPA law provides a number of advantages and guarantees for foreign entities, for investment in Kuwait, including:

1. Taking advantage of the available investment opportunities, by establishing a Kuwaiti company with ownership of up to 100%, or as a licensed branch of a foreign company, or as a representative office with the sole purpose of preparing market studies or production potential.
2. Tax incentives of up to ten years, in relation to the share of non-Kuwaiti shareholders in the profits from eligible projects.
3. Exemptions from customs duties.
4. Allocation of land to proposed projects.
5. Ensuring the protection of investors from seizure or confiscation, without compensation equivalent to the real economic value of the sourced project at the time of expropriation, ensuring the free transfer or transfer of capital and profits, and the disposal of ownership in the investment entity at any time without restrictions.
6. Avoid double taxation and benefits under bilateral agreements to protect and encourage investment.
7. Classification of investment entities licensed by the Authority in the Central Agency for Public Tenders, calculating their level of global experience.
8. Using the foreign labor necessary for investment, in accordance with the foundations and controls, issued by a decision of the Council of Ministers, on the minimum percentage of national employment to be provided.