Kuwait Direct Investment Law Amendments: Key Investor Changes

Proposed amendments to Kuwait Law No. 116 of 2013 on direct investment would introduce a more digital and investor-focused licensing framework, expand available investment structures, and revise the package of incentives, guarantees and compliance obligations available to investors and investment entities in Kuwait. The main points can be summarised as follows:

A. Investor Service Center and faster processing:

The amendments replace the former one-stop shop concept with an Investor Service Center responsible for investment-related services through an integrated digital platform linked to competent public authorities. Investors are intended to deal with the Center for procedures relating to investment activities, without having to approach the relevant public authorities directly, and applications, procedures and approvals processed through the platform will have full legal effect. Competent public authorities must determine applications referred through the Center within seven working days from submission of a complete application, and the lapse of that period without a decision will be deemed an implied approval, following which the Chairman of the Authority may issue the approval decision and required license. The investment license itself must be issued within seven working days from receipt of the necessary approvals and satisfaction of the applicable requirements.

B. Expanded forms of investment and ownership flexibility:

The amended framework expands the permitted forms of Investment Entity. In addition to establishing a Kuwaiti company with up to 100% foreign ownership, investors may acquire all or part of the shares or quotas in an existing Kuwaiti company, redomicile a foreign company to Kuwait while maintaining its legal personality and continuity, establish a branch of a foreign company, or establish a representative office limited to market studies and production possibilities. The Relevant Minister may, upon the proposal of the Board, add or

remove any other form of Investment Entity, in line with best practices and economic developments. The amendments also state that the authorised signatory for the Investment Entity is not required to be a Kuwaiti national.

C. Incentives, guarantees, tax facilitation and compliance:

The amendments introduce broader non-tax guarantees and benefits, including fair and equitable treatment, protection against discriminatory or arbitrary measures, restrictions on administrative interference in pricing or profits, protection from nationalisation or expropriation except in the public interest and against fair compensation, confidentiality protections for commercial information, and the ability to transfer profits, capital, proceeds, employee savings and statutory compensation abroad in accordance with applicable laws. Additional practical benefits include taking into account the financial and technical standing and track record of the Investment Entity’s founders or actual owners for classification and qualification purposes, potential usufruct rights over Authority-owned real estate assets for up to fifty years, and foreign labour and work permit arrangements.

The amendments provide a direct immigration benefit for foreign individual investors. A foreign investor who is a natural person and a partner in an Investment Entity is to be granted a work permit as a partner, regardless of the value or nature of his capital contribution. The investor, his spouse and first-degree relatives will also be eligible for the investor residency permit referred to in Decree-Law No. 114 of 2024 on the Residency of Foreigners. Under that law, investor residency may be granted for a period of up to fifteen years, subject to the conditions, controls and procedures issued by the competent authorities. Employees of the Investment Entity, based on the job titles approved by the Authority in coordination with the competent public authority, as well as their spouses and first-degree relatives, may benefit from the same provisions, subject to applicable regulations and procedures.

Disputes arising from the application of the Law are to be heard on an expedited basis before the competent Kuwait courts, investors and Investment Entities may resort to local or international arbitration, and the amendments contemplate the establishment of an International Centre for Arbitration and Alternative Dispute Resolution.

The incentives package has also been revised. Investment Entities may benefit from tax and financial exemptions, including exemptions from certain income, capital or similar taxes for periods that may aggregate up to fifty years, subject to the relevant rules and performance assessment. The amendments also provide for full or partial customs exemptions for qualifying imports, continued restrictions on disposing of exempted imports before the end of the prescribed five-year period, and new tax facilitation measures such as a dedicated investor tax unit, advance tax rulings, advance pricing agreements, tax audit by sampling and measures linked to excluded income for priority investments that enhance economic substance. At the same time, investors and Investment Entities are subject to updated obligations, including environmental, financial, tax, accounting, reporting and access obligations, and a broader administrative penalties regime for non-compliance.

Note: The above points are based on the draft amendments made available to us as of the date of publishing this alert. These amendments should not be treated as final, as they remain subject to ongoing discussions, negotiations and further review by the relevant authorities. Accordingly, the wording, scope and practical effect of the amendments may change materially before they are formally adopted or implemented. We are monitoring developments as part of our practice and for the benefit of our clients.

How can we help?

The Corporate team in Kuwait regularly advises on all aspects of foreign investment, doing business in Kuwait, setting up, acquiring, restructuring and redomiciling entities, and obtaining licenses, incentives and exemptions. If you require further information on how the above amendments may affect existing or proposed investments in Kuwait, then please feel free to contact us.