Kuwait to attract foreign investors
The Gulf Today | May 28, 2018- Kuwait is offering a number of incentives in an effort to increase the volume of foreign investment coming into the country, according to a new Deloitte report.
Deloitte said Kuwait continues to create an encouraging investment climate for the private sector to invest in infrastructure projects.
Its report said benefits to foreign investors include income tax holidays up to 10 years and exemptions from custom duties for importing relevant equipment and materials into the country.
The Kuwait Direct Investment Promotion Authority (KDIPA) has also introduced a scoring system that is followed when evaluating the issuance and approval of the investment licences while earlier this year it issued a new resolution announcing that the foreign taxpayers could calculate and claim their annual tax credit for their licensed operations, the report noted.
“Kuwait is opening its doors to foreign investment and encouraging companies to invest in the country to be part of its future development plans. Kuwait has previously announced its 2035 vision, which includes various mega projects,” said Ihab Abbas, partner and tax leader at Deloitte Kuwait.
Investment
“The plan will mainly focus on developing North Kuwait and the different islands around the country. The development programme is aimed at attracting investment, developing competitiveness, improving legislature to support the economic and social systems whilst creating more than 200,000 jobs. Kuwait has indeed become an attractive landscape for investment opportunities.”
Deloitte’s report addresses the key tax onsiderations for doing business in Kuwait. The Kuwaiti government has committed to introduce VAT by signing the main framework agreement with the GCC countries. The draft law has been approved by the Cabinet and is now with the Kuwaiti Parliament for approval.
Robert Tsang, indirect tax partner, Deloitte Middle East, said: “The introduction of VAT in Kuwait would entail increased administrative, reporting and record keeping requirements to comply with.
“VAT — being a consumption tax — would mainly impact end customers through price hike, although business may experience narrowing margins and increased price competition after the introduction of VAT. Experience from the UAE and Saudi Arabia shows that those business which prepared on time could gain competitive advantage and avoid business disruptions after VAT was introduced,” he added.
As Kuwait relies the most on oil – it still accounts for 60 per cent of its GDP – Kuwait had to confront the same economic realities as many of its neighbours when the price per barrel slipped below $30 in 2016, perhaps even more so. The country, however, has been able to face them head on with a combination of strong financial buffers, a growing service economy and an increasing appetite for foreign investment.
According to a recent report from National Bank of Kuwait (NBK), the country’s non-oil economy grew by 3.3 per cent in 2017, up two per cent from the previous year and slightly above NBK’s own forecast of three per cent. While the pace of growth tailed off slightly in the fourth quarter to 2.4 per cent, overall the economy has continued to recover from its drastic slowdown in 2014 and 2015.