KDIPA gateway for non-GCC nationals to do business in region
Since the inception of the Kuwait Direct Investment Promotion Authority (KDIPA) in accordance with Law No. 116 of 2013, many investors still fail to educate themselves on the program and take advantage of the benefits. While many foreign investors may consider Kuwait to be a closed market, the most recent modifications to the application process makes direct investment more feasible. It is arguable that KDIPA may be the gateway for non-GCC nationals doing business in the region.
In 2017, the Ministerial Decision No. 209 of 2017 for Regulating the Process of the Establishment of Persons Companies at the One Stop Shop (OSS) Department was enforced.
Such decision granted the KDIPA OSS Department the exclusive authority to receive, process and execute all applications for establishing a foreign owned business and the issuance of the necessary commercial licenses as of March 31, 2017. As a result, a foreign investor
Najmah Brown
can complete the application and approval process within 30 to 60 working days.
Upon application approval by KDIPA, the investor is then provided temporary residency under the Authority until investor obtains its license from the Ministry of Commerce and Industry. Then the investor can transfer his/her residency to its company.
KDIPA is also staffed with an Aftercare department that provides continuous support to make sure the investor is successful in the market and compliant with KDIPA requirements.
The aim of KDIPA is to increase national imports, increase professional training of its nationals and add value to the Kuwait market. So long as your business does not fall under a category on the Negative List, which specifies the business operations that are not eligible for the program, a foreign investor has a strong chance at being accepted by KDIPA to invest in the Kuwait market without a local partner.
Some of the benefits afforded to KDIPA licensed investors are whole or partial exemption from taxes, customs duties or other import fees, which is relevant considering the recent implementation of the Value Added Tax (VAT) in several GCC countries.
The business can be transferred to another foreign investor. Also, the investor’s profits, capital and proceeds from the business can be transferred outside of Kuwait and do not have to remain in a local bank.
All entities licensed pursuant to Article 12(1) of Law No. 116 of 2013, are categorized as a “Kuwaiti” company and afforded the same rights as companies owned by Kuwaiti nationals. Thus, a foreign investor can bid on government tenders in Kuwait and possibly open a branch office in another GCC country without a local partner. The companies that are licensed as a branch of a foreign Parent Company (pursuant to Article 12(2) of Law No. 116 of 2013) are allowed to bid on government tenders that call for foreign submissions, without a local partner.
While foreign investors can jump right into the Kuwaiti market without any local partners, it is still advisable to obtain support from local sources for various support services. KDIPA Decision No. 246 of 2017 allows service providers that are listed on the KDIPA website to submit applications on behalf of the foreign investor.