General Information

Kuwait is a wealthy country that has established a welfare state for its citizens. Kuwait is a member of the Gulf Cooperation Council (GCC), a political-economic organisation that includes Kuwait, Qatar, the Sultanate of Oman, Saudi Arabia, Bahrain and the United Arab Emirates. It is important to note that there is a gap with the West regarding the weekend: Friday-Saturday.

To trade with Kuwait, it is mandatory to have a local agent. In the context of an establishment, it is essential to have a local partner associated with the capital (sponsor). Foreign investors may not hold more than 49% of the capital of a company. Law No. 8/2001 on Foreign Direct Investment allowed foreign companies to incorporate into Kuwaiti companies without having a Kuwaiti partner.

It is strongly recommended to rely on a local firm for the formalities of incorporation of a company (advice, administrative procedures, etc.), particularly in tax matters.

It should be recalled that while oil exploitation accounts for 48% of GDP (total industrial sector 58% of GDP) and the service sector accounts for 51% of GDP, particularly via the real estate and financial subsectors, which employ 72% of the workforce, the agricultural sector accounts for only 0.4% of GDP due to a lack of water and arable land in a post-covid context where access to food and healthcare have become crucial issues for the country and the population.

Kuwait's economic and social model based solely on oil rents is affected by the fall in oil prices, which highlights the structural problems typical of rentier economies: the lack of economic diversification and the underdevelopment of the private sector. Public spending will support non-oil GDP growth.

The plan to introduce VAT has been postponed for the time being, but should be introduced very soon. By contrast, Kuwait has already implemented a 15% tax on foreign corporate profits.

However, the country has considerable financial resources that allow it considerable room for manoeuvre in the face of falling revenues.

In the long run, however, the economic outlook is hampered by the underdevelopment of the non-oil and private sector, and by the unproductivity of the public sector, which employs 70% of nationals.

The Kuwaiti dinar (KWD) is pegged to a basket of international currencies in which the US dollar predominates, an exception within the GCC where the fixed exchange rate is the rule. Reserves shield it from a sudden exit from this “fixed” exchange-rate regime.

Means of Payment & Banking Specificities

The US dollar and the euro are the most common currencies used in commercial transactions. 

The recommended means of payment for commercial transactions is the confirmed documentary credit payable on demand or within 30 days.

We have evidence that there has been an increase in payment delays, especially for transactions with the public sector.

Advance payments are possible if the amount justifies it.