The most notable legislative sources in Kuwait is Law n. 6/2010 (Private Sector Kuwait Labor Law). Article 10 of Law 6/2010 states that “The employer shall be prohibited from employing foreign manpower unless the competent authority has granted them a permit to work for him.
The Minister shall issue a resolution setting forth the procedures, documents and fees that shall be paid by the employer. In the event of refusal, such refusal shall be justified by stating the reason thereof, and the reason for such refusal shall not be related to the amount of the capital, otherwise the decision shall be absolutely null and void”.
Kuwait applies a ‘source’ approach to taxation, which means that, whilst tax is imposed only on the Kuwaiti-source income, a taxation liability can arise from activities not considered taxable in many jurisdictions.
The source of income is considered to be in Kuwait if the place of performance of services is within Kuwait. This includes, work carried out outside Kuwait (offshore activity) under a contract that also involves activity in Kuwait (onshore activity). Any significant presence of employees or short-term visits to Kuwait by representatives of a company may render the entire revenue from the transactions as taxable in Kuwait.
Foreign workers are required to have the proper visas and work permits in Kuwait, as established by immigration laws. Work permits must be secured for employees, and sponsored by a locally licensed and incorporated entity, which can be a problem for companies just entering the Kuwait market. If you have yet to complete the incorporation process, you can use an outsourced management company or GEO to sponsor the employee for the necessary permits.
In 2012, a new companies law has been passed in Kuwait, providing a more realistic and practical perspective than the previous companies law.
The Companies Law provides more types of companies that can be established in Kuwait, such as:
Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements. In most cases it will depend on the degree of commitment a company has to Kuwait and the planned business activity.
Companies entering Kuwait must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Kuwait Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Kuwait entity established that can run payroll.
A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally, Shield GEO is responsible for all compliance issues related to the employment.
|Management Fee for Employer of Record Services / Monthly Payroll Costs||
We personalise our solution to your exact needs, please contact us for a quote.
Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.
|Tax Returns Supplied||
Yes, Shield GEO can organise tax returns in Kuwait.
|Employers Social Security and statutory contributions||
11.5% calculated on gross salary
|Employees Social Security and statutory contributions||
8% calculated on gross salary
|Corporate Income Tax Rate||
15% on taxable profits
Currently not implemented
The rate of withholding tax on dividends is 15%.