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Kuwait

Kuwait has a geographically small, but wealthy, relatively open economy with crude oil reserves of about 102 billion barrels - more than 6% of world reserves. Kuwaiti officials plan to increase oil production to 4 million barrels per day by 2020. Petroleum accounts for over half of GDP, 94% of export revenues, and 89% of government income.

For the last decade, high oil prices have generated budget surpluses despite increasing budget expenditures, particularly on wage hikes for public sector employees. Despite Kuwait’s dependence on oil, the government has cushioned itself against the impact of lower oil prices by continuous saving of at least 10% of government revenue in the Fund for Future Generations. (Source: Central Intelligence Agency) 

Macro economy:  Kuwait is a High-income designated country and the world's 10th largest oil producer.   Oil industry accounts for nearly half of its GDP and 95 percent of export revenues and government income.  Low oil prices are taking a toll on the economy now. The government has moved to reduce the estimated $17bn in subsidies it pays annually (2014).  Economic diversification however is playing a critical role in its development with its KDP 2035 plan making a big infrastructure push.  Initiatives include a $20bn metro and rail project, the $1.2bn Mubarak Port project and a Media City. 

Islamic economy: Kuwait is the 14th largest economy (by GDP size) among the 57 OIC (Organization of Islamic Cooperation) member countries.  However, Kuwait ranks #7 in the Global Islamic Economy Development Indicator produced by Thomson Reuters. The ranking evaluates quality of the overall Islamic economy ecosystem a country has relative to its size.  Kuwait has a very competitive Islamic finance ecosystem with $88 billion in Islamic banking assets (2014, Thomson Reuters data) which is about 7% of total global Islamic banking assets.  It also has a healthy Halal food ecosystem and ranks #11 in this segment among the 73 countries in the index.  Kuwait based, Americana brand is a major halal food brand and is owned by a major business conglomerate, the Al Kharafi group. Kuwait also has an active creative media industry sector and ranks #13 in this segment.

GIEI Ranking7
Halal Ranking12th in Global Muslim Travel Index (GMTI 2015)/Crescentrating
Major Industries
MAJOR EXPORTSMAJOR IMPORTS

Crude Oil

Refined Petroleum Products

Fertilizers

Food

Construction Materials

Vehicles & Parts

Clothing

Source: Central Intelligence Agency

 

 

 

Halal-related agencies Intro

Contact Kuwait Chamber of Commerce and Industry, PO Box 775, Safat 13008, Kuwait (Tel. 965-243 3864)

Halal compliance guidelines Intro

Customs and Regulations

Tariffs are based on the Harmonised International System (HIS) Code for classification of imports and exports.

Import tariffs in Kuwait are relatively low. A flat rate of 5% is applied to the cost, including insurance and freight of imported goods. Staple foods including rice, wheat and tea are exempt from import duties. Import duties on tobacco are 100% and could be increased in the near future.

Legislation and Local Regulations

Foreign corporate operations in Kuwait are liable to taxation on profits. The Kuwait Government has set a flat rate of 15 per cent which will be levied on the income of any foreign corporate carrying on trade or business in Kuwait.

A Double Taxation Agreement has been signed between the UK and Kuwait. For further details contact the Inland Revenue, International Division.

There is no personal income tax in Kuwait. (Source: UK Trade & Investment)

Halal-related trade and trading
OIC member Yes
Other regional/global membershipsWTO, OPEC, United Nations
Investment and Export Promotion Agencies Intro

What companies should consider when doing business

Foreign companies wishing to operate in Kuwait without setting up a Kuwaiti registered legal entity may only do so through a Kuwaiti agent. Establishing new business works best with a carefully chosen Kuwaiti partner or advisor, who is able to keep in contact with customers, seek business and provide information on the latest market trends. The success of the relationship with the agent depends upon face-to-face contact and regular communication. Companies providing promotional and marketing assistance to their agent will have an advantage.

Gateways/Locations - Key areas for business

Kuwait has a number of industrial areas, the largest being located in Shuwaikh, Sabhan and Shuaiba. Kuwait has its Free Trade Zone located at Shuwaikh port, under the supervision of Ministry of Commerce and Industry. The zone provides facilities for the storage and processing of goods, materials and other related activities, with companies operating there enjoying exemptions from all custom duties as well as streamlined visa procedures.

Market entry and start up Considerations

The basic laws regulating conducting business in Kuwait states that non-Kuwaitis cannot engage in commercial activities without a Kuwaiti partner whose equity holding should not be less than 51 per cent. An exception to this under Law No 8/2001 has been enacted permitting foreign entities to establish Kuwaiti companies with stakes upto 100% foreign equity participation. (Source: UK Trade & Investment)

Investment and Export Promotion Agencies Names Kuwait Investment Authority
Trade Agreement

GCC-Singapore FTA

Company ownership limits
(foreign and local)

License under Foreign Investment Law

The Foreign Investment Law (No. 8/2001) proposes to regulate foreign investments in Kuwait. Under the law it is intended to allow foreign investors to own up to 100% equity in Kuwaiti companies or ventures for special projects as determined by the Council of Ministers. Prior to the enactment of this law, foreign investors were subject to a ceiling of 49% (maximum) stipulated under the Law of Commerce No. 68 of 1980 and the Commercial Companies Law No. 15 of 1960. The law proposes to do away with such restrictions imposed upon foreign investors. (Source: UK Trade & Investment)