New Commercial Concealment Law: What you need to know
- Kuwait’s Decree-Law No. 78 of 2026 on combating commercial concealment criminalizes arrangements where a license holder enables unauthorized persons or entities to run a business.
- Violators face 1 to 3 years in prison and heavy fines of KD 10,000 to KD 100,000, alongside mandatory asset confiscation, business closure, and deportation for foreign offenders.
Kuwait’s new Law No. 78 of 2026 on Combating Commercial Concealment has triggered widespread questions among business owners, license holders and residents.
The law aims to prevent people from conducting economic activities without the required licenses or through arrangements that hide the real beneficiary of a business.
To clarify the new rules, Acting Undersecretary of the Ministry of Commerce and Industry Marwa Al-Jaidan explains the most frequently asked questions.
What is commercial concealment?
Commercial concealment, commonly referred to as “commercial cover-up” or “inclusion”, occurs when someone enables another person to conduct an economic activity in violation of the law.
This can include allowing another person to use a commercial license, trade name, commercial register or other means to operate a business.
The law is not limited to arrangements between Kuwaitis and expatriates. It can also apply between two Kuwaitis, including family members, if a license is registered in one person’s name while another person is actually running the business or benefiting from its profits.
The law applies to individuals as well as companies and covers commercial licenses registered with the Ministry of Commerce and Industry.
Renting out a license is prohibited
A person cannot legally rent out a commercial license to someone who is not registered under that license in exchange for a monthly or annual payment.
Similarly, allowing another person to use a registered trade name or commercial license to conduct an activity can constitute commercial concealment.
Residents are also prohibited from conducting activities for which they are not legally authorized, while no person may conduct an economic activity without the required license.
A license holder also cannot use the license to conduct activities outside the scope for which it was issued.
How will violations be detected?
The law strengthens coordination between the Ministry of Commerce and other authorities, including the Ministry of Interior, Public Prosecution, Financial Intelligence Unit (KwFIU) , banks, exchange companies, electronic payment providers, investment companies and insurance companies.
These entities can report suspected inaccurate information about a company’s beneficial owner through the Ministry of Commerce’s commercial registry system. Financial transactions can also help authorities identify possible discrepancies.
For example, if a company is officially owned 51 percent by a Kuwaiti and 49 percent by a resident, profits and financial transfers would normally be expected to reflect those ownership shares. Significant discrepancies could trigger scrutiny and reporting.
Can residents own part of a company?
Under the rules outlined in the guide, an Article 18 resident may enter the ownership structure of a company within the legally permitted percentage, which cannot exceed 49 percent of the capital.
This applies to companies and not individual establishments, which are reserved for Kuwaiti individuals under the relevant rules.
What are the penalties?
Commercial concealment carries a prison sentence of one to three years and a fine ranging from 10,000 to 100,000 dinars, or either penalty.
The fine can be higher if the profits obtained through the offence exceed 100,000 dinars. In such cases, the fine may reach the value of the illegal profits.
If there is a conviction, proceeds generated through the offence can also be confiscated. The tools and means used to commit the violation may likewise be confiscated.
Repeat offenders face doubled penalties if they commit another commercial concealment offence within five years of a final conviction.
What happens to the business?
Following a conviction, measures can include closure of the establishment, cancellation of the commercial license and administrative deportation of the foreign offender. The law also protects the rights of bona fide third parties.
Companies may also bear financial responsibility for violations committed by their employees when the offence is carried out in the company’s name or for its benefit.
Managers and officials can face liability if they knowingly ignore false information or fail to perform duties in a way that contributes to the violation.
Is there a grace period?
The penalties will not be applied immediately. According to the guide, the law’s enforcement will begin after the executive regulations are issued, with the application expected after six months.
This period is intended to allow businesses and license holders to understand the requirements and regularize their legal status.
Can offenders settle the case?
Yes. Reconciliation may be permitted before criminal proceedings begin, during the proceedings or before a final judgment is issued.
However, the settlement amount must be at least half of the maximum fine prescribed for the offence. Paying the amount alone is not enough: the violation must also be removed and the legal situation corrected.
If the requirements are met, the criminal case is dismissed. However, reconciliation does not prevent administrative deportation if authorities consider it necessary in the national interest.
Settlement is not permitted for repeat offenders.
Can people who report violations receive rewards?
Yes. The law provides for financial rewards for people who report commercial concealment offences and provide serious evidence that helps uncover the crime and leads to a final conviction.
The reward can be up to 10 percent of the fines collected, shared equally among qualifying informants. The criteria for awarding such rewards will be determined by the competent minister.
What powers do inspectors have?
Officials designated to enforce the law will have judicial enforcement powers. They can request documents and information needed to investigate suspected violations.
Individuals and businesses cannot refuse to provide requested information or obstruct inspectors from carrying out their duties.
Providing false or misleading information or records is also prohibited.
Those who obstruct inspectors or provide misleading information can face up to six months in prison and a fine of up to 10,000 dinars, or either penalty. The fines may increase depending on the number of violations or activities involved.
Why was the law introduced?
The government says the law is designed to create a more transparent and organized business environment, protect legitimate competition and ensure equal opportunities.
It seeks to prevent businesses from operating without proper licenses or hiding the identity of their actual beneficiaries, while strengthening the authorities’ ability to monitor economic activities, regulate the market and protect the national economy.
Any legal provision that conflicts with the new law will be repealed, while the competent authorities will issue the necessary decisions to implement its provisions.
