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Starting a business in Kuwait needs strict compliance with its various laws, regulations, and policies. The State of Kuwait is quite straightforward in its requirements to start a business, and locals, as well as foreign business owners and investors, need to be aware of all of the basic requirements and legal procedures.
To begin with, one of the primary regulations in Kuwait state that no foreign investor or businessman can own more than 49 percent of the company. In other words, if you are not a citizen of Kuwait, you must find a local partner who will hold a minimum of 51 percent stake in the company. However, in order to attract more foreign investment, the Foreign Direct Investment Law No. 8/2001 contained provisions enabling foreign companies to be incorporated as Kuwaiti Companies without having a local Kuwaiti partner.
Additionally, business owners and investors must first apply for and receive a residential visa to start a business in Kuwait. The higher positioned employees of the firm, like a manager, must be either Kuwaiti citizens or must be a citizen of one of the GCC (Gulf Cooperation Council) Countries. Anyone starting a business in Kuwait must also ensure that they do not have any criminal record.
There are a number of advantages to starting a business in Kuwait. Firstly, the Kuwaiti economy is quite stable and fairly strong, which is very attractive to both locals and ex-pats. Despite being business-friendly and having a business-enabling environment, there is just about one-third of domestically owned businesses in the country. The low corporate tax set at 15% for foreign nationals is another advantage of setting up business in Kuwait. Additionally, Kuwaiti businessmen and GCC citizens are exempted from corporate taxes, and there are no personal income taxes for anyone, making Kuwait a top choice for new ventures.
Process of setting up a business in Kuwait
As with every country around the globe, the State of Kuwait has its own unique requirements for starting a business here. There are a number of steps to start a business in Kuwait, and as an enterprising individual, it is the duty of an investor or business owner to familiarize themselves with these steps. Those learning how to start a business in Kuwait must factor in the requirements of the region, the kind of business etiquette that must be followed, basic requirements for starting a business in Kuwait, as well as all the regulatory and compliance documentation that they must complete before successfully incorporating their company. Here is what you need to do to start a business in Kuwait:
Determining the legal structure of the company is essential to clarify the scope of liability of every partner and shareholder. An LLC, for example, clearly determines how far the liabilities of every partner extend. Additionally, every member or partner must also provide proof that they have paid their share of the capital.
The primary requirements of registration of the company include collecting certain documents. These documents include a field out the application form which would contain the details of the company, like the name of the organization along with the shareholding ratios. This application must be submitted to the Ministry of Commerce. Thereafter, you need to visit the social security office to get a certificate proving that the local partner is not a government employee or official. This certificate, along with an ID of the business owner, would also be submitted along with the application.
After this, there would be some background checks of the members and the premises. They would also check if your company name is available and is aligned with the moral standards of the region. After the name is approved, it is reserved for a duration of three months, during which you are expected to complete the remaining processes.
The next step is to deposit the paid-up capital for your company. This amount will be frozen until incorporation is completed. Thereafter, after multiple municipal checks of the premises to check for adherence to safety standards, you need to submit a memorandum of association. Once the memorandum is approved and notarized, the department of Commercial Registry will issue a certificate of registration. Upon receiving the certificate, the department of companies would issue a commercial license. After all, this is done, your company can start functioning normally in Kuwait.
Employee hiring is one of the most important parts of starting a business in Kuwait. For any company to flourish and grow, there is a need for expert professionals who can deliver services in one of the various verticals that the business is dealing with. There is a need for an HR department, a legal department, sales and business departments, and so on. While some job posts like HR are common to all companies, some other aspects can be unique to a particular type of business. For example, no company needs a full-fledged software development team. This is why availing of the services of experienced HR consultants at Zimyo can make the difference for you while hiring the best talent.
To ensure that you hire the correct employees legally, the labor laws of the country must be learned. They contain various provisions dictating the full process of employee hiring.
Overtime is allowed but for a maximum of 180 hours per year. Overtime wages must equal 125% of the regular wages. If an employee is asked to work on a day off or a rest day, they are entitled to 150% pay in addition to another day off. Those working on a public holiday would be entitled to 200% of their regular salary.
For any country to be considered business-friendly or its environment to be business-enabling, it needs to be assessed across various parameters. The Ease of Doing Business index does this job for you. It compares 190 countries across various important criteria which play a key role in making it simple to start or conduct business in that country. Because of its fairly restrictive policies currently, Kuwait ranked 83 overall in a pool of 190 countries with a score of 67.4.
These criteria are measured upon constant or uniform occurrences or policies used in almost all countries. For example, a limited liability company is a legal structure of companies that is recognized in almost all countries in the world. In determining the rank for every parameter, various individual factors that pertain to or affect that parameter are taken into account. While there are a lot of criteria that are used to rank countries, some of the most important factors are as follows:
Despite the numerous factors which make Kuwait slightly more restrictive in its customs relating to business and trade, there are a lot of benefits to starting a venture here. There are a lot of opportunities in this part of the world, and with a little thorough research, anyone can start and establish a successful business in this region. Having a good knowledge of the region, the commercial laws, labor laws, market landscape, and, more importantly, things to avoid, you can build a strong and respected business in this country. The fact that they are making reforms to encourage foreign trade makes the deal sweeter.
Zimyo is a leading HR and Payroll management services provider in Kuwait with multiple years of experience. The company helps businesses hire the best talent and takes care of the financial requirements of employees, such as advances or credit for a hassle-free work experience.