Kuwait has issued Decree-Law No. 78 of 2026 on combating commercial concealment, introducing a comprehensive legal framework to curb illegal business practices, strengthen market regulation, and promote transparency and fair competition.
Published on Sunday, the 14-article decree-law aims to address the growing problem of individuals conducting economic activities without the required licenses or using others to conceal their commercial operations.
The law also seeks to enhance the state’s ability to regulate markets, improve oversight, protect public revenues, and create a fair business environment.
According to the explanatory memorandum accompanying the decree-law, economic activities are among the key pillars of Kuwait’s development and stability and must be conducted within a regulated legal framework that supports sustainable economic growth and safeguards public order.
The memorandum noted that recent years have witnessed an increase in unauthorized business activities by individuals operating without the necessary licenses, creating market disorder, undermining fair competition, and negatively affecting the country’s economic environment.
The law defines key legal terms and establishes a clear prohibition against any individual or legal entity engaging in economic activities in Kuwait without first obtaining the necessary license from the competent authority or operating beyond the scope of an approved license.
It also criminalizes commercial concealment by prohibiting any person from directly or indirectly enabling another individual to conduct an economic activity illegally. This includes allowing the use of a commercial license, trade name, or any other means to facilitate unauthorized business operations.
The decree-law introduces stringent penalties for violations. Anyone found engaging in or facilitating unauthorized economic activity may face imprisonment for one to three years, a fine ranging from 10,000 to 100,000 dinars, or an amount equivalent to the total illegal profits earned, whichever is higher.
Courts may also impose either imprisonment or a fine, depending on the circumstances. Fines may be multiplied based on the number of offenders or the number of illegal activities involved.
The law also imposes penalties on anyone who obstructs enforcement officials or violates provisions related to inspections and investigations. Offenders may face imprisonment of up to six months and fines of up to 10,000 dinars, or one of the two penalties.
Managers who exercise actual control over an establishment will be held personally accountable if they were aware of the violation or failed to perform their supervisory duties. This provision is intended to ensure that those responsible for managing businesses cannot evade liability.
Legal entities will also bear responsibility for violations committed by their employees when such offenses are carried out in the company’s name or for its benefit, reinforcing the principle of institutional accountability.
In addition to criminal penalties, courts must order the confiscation of funds and profits generated through commercial concealment. The law also authorizes the confiscation of equipment and tools used in committing the offense, closure of the violating establishment, cancellation of its commercial license, and deportation of foreign offenders after conviction.
The decree-law provides safeguards for bona fide third parties by ensuring that confiscation measures apply only to the proceeds and instruments directly linked to the illegal activity.
Repeat offenders will face significantly harsher consequences. The law doubles the prescribed penalties if a person commits the same offense within five years of a final conviction, strengthening deterrence against habitual violators.
A reconciliation mechanism has also been introduced to resolve certain violations before a final court judgment. The competent minister, or a designated official, may approve reconciliation if the offender pays no less than half of the maximum prescribed fine and rectifies the violation by legalizing their business status.
Successful reconciliation will terminate criminal proceedings. However, the law makes clear that administrative deportation of foreign nationals may still be carried out if deemed necessary in the public interest. Repeat offenders are not eligible for reconciliation.
To encourage public participation in combating commercial concealment, the law introduces a whistleblower reward system. Individuals who provide credible information leading to the discovery of commercial concealment crimes and a final conviction may receive a financial reward of up to 10 percent of the total fines collected. If multiple individuals report the same offense, the reward will be shared equally.
The decree-law also grants judicial police powers to designated officials responsible for enforcing its provisions, enabling them to conduct inspections, investigate violations, and implement enforcement measures more effectively.
To support enforcement, the law prohibits anyone from obstructing inspectors, refusing to provide requested documents or information, or submitting false or misleading data during investigations. Such actions constitute separate offenses under the decree-law, the Kuwait News Agency reports.
The legislation authorizes the competent minister to issue the executive regulations and implementing decisions necessary for its enforcement. It also repeals any legal provisions that conflict with the new law.
The decree-law will enter into force six months after its publication in the Official Gazette, allowing businesses and relevant authorities time to comply with the new regulatory framework before enforcement begins.
The government expects the new legislation to strengthen transparency, eliminate commercial concealment, improve investor confidence, protect legitimate businesses, and reinforce Kuwait’s efforts to build a more competitive, accountable, and sustainable economy.
