New groundbreaking law set to attract Foreign Direct Investments to Kuwait
DLA Piper has welcomed the recently introduced Direct Investment Promotion Law in the State of Kuwait (Decree Law No. 116 for 2013), published in the Official Gazette (Kuwait Al-Youm) on 16 June 2013.
The new law will come into force six months from the date of issuance and is part of a number of legislative developments designed to install international best practices and further enhance the economic development of Kuwait, said a press release from DLA Piper.
Abdul Aziz Al-Yaqout, Regional Managing Partner, DLA Piper Middle East, said, "The new law is part of a number of recent, positive legislative developments in Kuwait's investment sector designed to encourage foreign investors as well as align it with international best practices."
Law No. 116 has been drafted to encourage investment in Kuwait and to provide comfort to investors and organisations looking to expand their operation in the state. Key aspects of the new law include the following:
- Establishment of a new public authority tasked with the licensing of direct investment in Kuwait. The authority will be overseen by a board composed of representatives from both the public and private sectors, and chaired by the Minister of Commerce and Industry.
- Under the new Law foreign investors can operate in the country through either a Kuwaiti company that may be licensed to be 100% foreign owned, through a registered branch or through a representative office.
- Investors will continue to benefit from tax exemptions for a period of up to 10 years, as well as tax and customs exemptions for the importation of machinery, equipment, spare parts, raw materials and intermediary goods, among others, in addition to the employment of foreign labour.
- An important change is the adoption of a "negative list" approach by opening up all economic sectors to foreign investment except those sectors specifically prohibited by decision of the Council of Ministers.
- The Law provides a maximum period of 30 days from the date of receipt of the completed application for a decision to be rendered in respect of investment license. In addition, the law adopts the "one-stop shop" whereby one administrative unit within the newly-established public authority will be responsible to coordinate the issuing of all necessary license to operate the business.
"This is a significant step forward for businesses in Kuwait as the new law is set to make further improvements in the way companies operate, ultimately creating a more level playing field and enhancing the confidence of investors in Kuwait as a solid growth market," concluded Abdul Aziz Al-Yaqout, Regional Managing Partner, DLA Piper Middle East LLP.