Law No. 116 of 2013 on the Promotion of Direct Investment in the State of Kuwait

Law No. 116 of 2013
on the Promotion of Direct Investment in the State of Kuwait

Article 1

The following words and terms shall have the meaning assigned to each of them:
– Competent Minister: the Minister of Commerce and Industry.
– Authority: the Direct Investment Promotion Authority.
– Board: the Board of Directors of the Authority.
– Chairman of the Board: the Competent Minister.
– Director General: the Director General of the Authority.
– Regulations: the Executive Regulations of this Law.
– Investor: a natural or legal person, whatever his nationality.
– Licence: the investment licence issued in accordance with the provisions of this Law.
– Investment Entity: a project or economic activity licensed in accordance with the provisions of this Law under an investment licence that grants it legal existence in the State of Kuwait.
– Capital: whatever is invested or used directly for the purposes of direct investment in an Investment Entity subject to the provisions of this Law, including:
1- Cash and securities and commercial papers, whether local or foreign.
2- Machinery, tools, equipment, means of transport and other technological apparatus.
3- Raw materials and commodity supplies required to commence actual production or operation in the Investment Entity.
4- Intangible rights such as patents, trademarks, licences, registered trade names and engineering and technological designs.
5- Profits and returns on the invested capital if the capital is increased by them, or if they are invested or used for the purposes of direct investment in an Investment Entity licensed in accordance with the provisions of this Law.
– Direct Investment: investment made through the Investor’s investing of his capital, alone or in partnership with another investor, directly in an Investment Entity within the State of Kuwait that is licensed in accordance with the provisions of this Law.
– Application: the application submitted by the Investor to obtain, as the case may be, the Licence or the incentives, or the merger of Investment Entities, in accordance with the bases and rules specific to each case.

Article 2

A public authority having legal personality, named the “Direct Investment Promotion Authority”, shall be established and shall be affiliated to the Competent Minister.
The Authority shall have its seat in the State of Kuwait, and it may establish offices inside and outside the country.

Article 3

The Authority aims to attract, draw in and promote direct investment in the country, both foreign and local, which includes the following:
1- Developing and improving the investment environment, facilitating procedures and removing obstacles facing investors, and providing the various means of support and facilities to promote direct investment in the country.
2- Deepening awareness of the importance of direct investment, particularly foreign investment, and promoting the Kuwaiti investment environment and the direct investment opportunities available in it, by all means of advertising, information and promotion.
3- Encouraging investors to transfer, localise and use modern and advanced technology, means of production and operation, management methods, and technical and marketing expertise; and working to encourage partnerships between the Kuwaiti investor and the foreign investor that achieve development objectives.
The Authority shall carry out its work in light of the general policy of the State and the approved economic development plans, the development of the productive sectors, the diversification of the sources of national income in the State of Kuwait, and the creation of job opportunities for the national workforce and the raising of its productivity and professional skills in the use of the latest technology in accordance with the best international standards approved in this regard.

Article 4

The Authority shall be competent for everything that ensures the achievement of its objectives, and it shall in particular have the following:
1- Conducting a survey of the possible direct investment opportunities in the country and promoting them, and setting out the incentives, exemptions and guarantees enjoyed by investors, as well as preparing the necessary studies, research and statistics, and providing investors with the available information, clarifications and statistics.
2- Receiving investors’ applications, examining them and taking the necessary measures in respect of them in accordance with the provisions of this Law and its Executive Regulations.
3- Establishing economic zones and proposing their locations within the framework of the general master plan, in coordination with the relevant authorities.
4- Establishing, or participating in the capital of, specialised companies to establish or manage business incubators for projects that achieve the objectives of the Authority, after the approval of the Council of Ministers and in accordance with the bases and rules set by the Board in this regard.
5- Coordinating with all the relevant and competent authorities in order to simplify and facilitate the procedures and services required to improve and develop the investment environment in the State of Kuwait and increase its competitive advantages, and monitoring the competitive position and performance indicators in the field of investment in light of international standards and reports, in a manner that ensures the promotion of direct investment within the State of Kuwait.
6- Organising conferences, seminars, exhibitions and courses, providing services and training programmes consistent with its objectives, participating in local and foreign events, and preparing, printing and publishing all topics related to its work and activities.
7- Coordinating with the concerned authorities in order to provide the possible financing and credit facilities to encourage the investments the country needs.
8- Monitoring and following up the performance of direct investments in the country, identifying any obstacles they may face and working to overcome them in coordination with the competent authorities.
9- Carrying out any tasks and powers assigned to it by the Council of Ministers or the Competent Minister that are related to its objectives or that would promote direct investment in the country.

Article 5

The Authority shall have a Board of Directors chaired by the Competent Minister and composed of the following members:
1) Three members with experience and expertise in the affairs of the Authority, to be appointed by the Council of Ministers upon the proposal of the Competent Minister; the appointing resolution shall designate one of them as Vice-Chairman, who shall exercise the powers of the Chairman in his absence.
2) Three members representing ministries and government entities related to the activity of the Authority, which shall be specified by a resolution of the Council of Ministers upon the proposal of the Competent Minister, provided that their grade is not lower than Assistant Undersecretary or its equivalent.
3) The Director General shall attend the meetings of the Board without taking part in voting.
The term of the Board shall be four years, renewable, and the remuneration of its members shall be determined by a resolution of the Council of Ministers.
The Chairman of the Board, or whomever he authorises, shall sign on behalf of the Authority and represent it in its relations with third parties and before the courts.

Article 6

The Board shall meet at the invitation of its Chairman or the Vice-Chairman, and a meeting of the Board shall be valid if attended by a majority of its members, provided that the Chairman or the Vice-Chairman is among them.
The Board shall have a secretary chosen by the Chairman of the Board from among the employees of the Authority, who shall prepare for the meetings of the Board, record their minutes and follow up the resolutions issued at them. The Board may invite to attend its meetings any person whose attendance it deems necessary to take part in the discussion of a particular matter, without the right to vote.
The resolutions of the Board shall be issued by a majority of the votes of its members, and in the event of a tie, the side on which the Chairman voted shall prevail.
The Board shall issue the resolutions necessary concerning its working system, the rules, procedures and dates of its meetings, the provisions for implementing its resolutions, and the organisation of the work of the committees emanating from it.

Article 7

Members of the Board of Directors and employees of the Authority are prohibited from having any personal interest, direct or indirect, in any project or in the services provided by the Authority. They shall disclose their interests and shall refrain from participating in the discussion of, or the taking of any decision on, a project in which any of them, his spouse or his first-degree relatives has an interest. In the event of violation, the decision shall be void, as shall all the effects resulting from it, and it shall be deemed never to have existed.

Article 8

The Board shall have all the powers necessary to achieve the objectives of the Authority. It shall set the general policy of the Authority and supervise its implementation, and it shall in particular have the following:
1- Setting the bases, rules and criteria on the basis of which investors’ applications of all kinds are evaluated, in accordance with what is prescribed by this Law and its Executive Regulations.
2- Setting the bases and rules for the use of the land, real estate and plots allocated to the Authority or those subject to its supervision or management.
3- Approving the internal by-laws and the organisational structure of the Authority, and issuing all the administrative, financial and technical regulations necessary for the conduct of its business.
4- Approving the draft annual budget of the Authority and its final account before referring them to the competent authorities.
5- Deciding on the merger applications provided for in this Law.
6- Imposing the administrative and disciplinary sanctions provided for in this Law.
7- Approving the opening of offices of the Authority inside and outside the country.
8- Setting the criteria for benefiting from the tax incentives and exemptions in accordance with the provisions of this Law.
9- Deciding on the recommendations submitted to it by the competent committees relating to the application of the provisions of this Law.
10- Issuing the resolutions necessary to achieve the objectives of this Law in accordance with its provisions and its Executive Regulations.
The Board may delegate some of its powers to its Chairman or the Vice-Chairman.

Article 9

The Authority shall have a Director General of a grade not lower than that of Undersecretary, appointed by decree upon the proposal of the Competent Minister for a term of four years, renewable.
The Director General shall implement the resolutions of the Board and supervise the technical, administrative and financial bodies of the Authority. He shall also prepare annual statistics on the activity of the Authority, showing the number of projects submitted to it, the projects approved and the projects rejected together with the reasons for rejection, and submit them to the Council of Ministers.
The Director General shall be assisted by one or more assistants of a grade not lower than that of Assistant Undersecretary, appointed by decree upon the proposal of the Competent Minister for a term of four years, renewable. The Director General may delegate some of his powers to any of his assistants.

Article 10

The Authority shall have an annexed budget. Its financial year shall begin and end with the financial year of the State, provided that the first financial year begins from the date on which this Law comes into force and ends at the end of the following financial year.
The resources of the Authority shall consist of the following:
1- The appropriations allocated to it in the annual State budget.
2- The consideration, returns or fees resulting from the activities carried out, services provided, or events, courses or training programmes organised by the Authority for those concerned with direct investment affairs, in accordance with what the Board decides in this regard.
3- The consideration or returns resulting from the exploitation of the funds allocated to the Authority or subject to its supervision or management.

Article 11

Taking into account the provisions of Articles (152) and (153) of the Constitution, the Council of Ministers shall set a list of direct investments that are not subject to the provisions of this Law, and it may update it in light of the general policy and plans of the State and what the Board of Directors of the Authority proposes in this regard.
The Council of Ministers shall set the bases and rules for investments by foreign legal persons in the State of Kuwait.

Article 12

An application for a licence to invest in accordance with the provisions of this Law shall be submitted through a specified Investment Entity, according to the following cases:
1- A Kuwaiti company of one of the types of companies provided for in the Commercial Companies Law promulgated by Decree-Law No. (25) of 2012, established for the purpose of direct investment. The foreign share in such a company may reach up to 100% of its capital, in accordance with the bases and rules provided for in the Companies Law.
2- A branch of a foreign company licensed to operate within the State of Kuwait for the purpose of direct investment. The Competent Minister shall, upon the proposal of the Board, issue a resolution setting out the bases and rules regulating the relationship between the branch of the foreign company and the official authorities with respect to the transactions necessary to commence business.
3- Representative offices whose purpose is limited to studying markets and production possibilities, without engaging in commercial activity or the activity of commercial agents; the Board shall set the bases and rules in this regard.

Article 13

The Executive Regulations shall set out the bases, rules and procedures for submitting and registering applications to obtain the appropriate licence in the cases provided for in this Law. They shall also set out the information and data that shall be contained in or attached to the application, the conditions that shall be met by the applicant, the appropriate methods of notice and notification, and the fees relating to the issuance of licences.

Article 14

The Licence shall be issued by a decision of the Director General once the application meets the evaluation criteria, bases and rules set by the Board for each of the cases provided for in this Law, of which the Investor shall be informed in advance upon submitting his application to the Authority.
The provisions of Clause (1) of Article (23) and the provisions of Article (24) of the Commercial Code referred to above shall not apply, with respect to foreigners, to this Licence.
The establishment of foreign banks and their branches shall be licensed in accordance with the provisions of this Law, without prejudice to the provisions of Law No. (32) of 1968 referred to above and the resolutions and instructions issued in implementation thereof.
In all cases, the Authority shall coordinate with the Ministry of Commerce and Industry regarding the establishment and licensing and the supervision of companies, branches and representative offices that are subject to the provisions of this Law.

Article 15

The decision on a licence application shall be issued within thirty days from the date of its submission complete with all the data, documents and requirements specified by the Authority.

Article 16

If a licence application is rejected, the rejection decision shall be in writing and reasoned. The applicant may file a grievance against the rejection decision, and the lapse of thirty days from the date on which the grievance is officially received without a reply shall be deemed a decision rejecting the grievance.

Article 17

An administrative unit named the “One-Stop Shop” shall be established within the Authority, comprising employees delegated by the government entities related to the procedures for licensing and operating the Investment Entity, so as to complete the processing of transactions not exceeding the period provided for in this Law.
The Board shall set the bases and rules necessary to determine the said government entities, the manner of using their employees and the coordination between them and the Authority.
The applicant may authorise specialised companies or qualified consultancy offices accredited by the Authority to act on his behalf, in accordance with bases and rules determined by the Authority.

Article 18

Every Investment Entity licensed in accordance with the provisions of this Law shall keep regular accounts under the supervision of one or more licensed auditors. If the Investor is licensed for more than one Investment Entity, each of them shall be dealt with separately.

Article 19

No Investment Entity licensed in accordance with the provisions of this Law may be confiscated or expropriated except for public benefit in accordance with the laws in force and against compensation equal to the true economic value of the expropriated project at the time of expropriation, assessed according to the economic situation prior to any threat of expropriation. The compensation due shall be paid immediately upon the taking of the said decision.

Article 20

The Investor shall have the right to transfer ownership of the licensed Investment Entity, assign it, or dispose of it wholly or partly, in favour of a foreign or Kuwaiti investor; the Board shall set the bases and rules regulating this matter.
In the event of the transfer of ownership or the assignment of the Investment Entity, wholly or partly, the new owner or the assignee shall replace the original owner in rights and obligations.

Article 21

Two or more Investment Entities may, with the approval of the Board, merge on the basis of a joint application submitted to the Authority in this regard. The new entity resulting from the merger shall be the legal successor of the merged entities and shall replace them in rights and obligations.
The new entity shall automatically enjoy the shortest of the remaining periods of the exemptions and incentives granted to any of the merged Investment Entities.

Article 22

The Investor may transfer abroad his profits, his capital, the proceeds of the disposal of his shares or stake in the Investment Entity, or the compensation provided for in this Law; and the employees of the Investment Entity may transfer their savings and entitlements abroad.

Article 23

Under the provisions of this Law, the Investor shall enjoy the principles of confidentiality of the technical, economic and financial information relating to his investment and the protection of initiatives, in accordance with the provisions of the laws and regulations in force in the country.
Without prejudice to any more severe penalty provided for by another law, any person who discloses or benefits from any information that has come to his knowledge by reason of the duties of his office, or by reason of his participation in any work of the Authority or any of its bodies, relating to investment initiatives or to the technical, economic or financial aspects of an investment subject to the provisions of this Law, shall be punished by imprisonment for a period not exceeding one year and a fine of not less than one thousand dinars and not exceeding ten thousand dinars, or by either of these two penalties, except in the cases where the law permits this, or in execution of a judgment or an order of a judicial authority.

Article 24

Unless there is a special provision in this Law, the laws and regulations in force in the country shall apply to the direct investment subject to its provisions, and all the international agreements in force in the country relating to investment and to the avoidance of double taxation shall be observed.

Article 25

The provisions of this Law shall apply to direct investment existing or licensed before it came into force, in a manner that does not cause it any harm, and provided that the incentives, exemptions and guarantees granted under its provisions are not less than those established for the investment before it came into force. The Investor’s applications to benefit from the incentives provided for in this Law shall be submitted to the Authority for consideration.
The provisions of this Law shall apply to any expansion of or modification to an existing Investment Entity if the expansion or modification takes place after the date on which this Law comes into force, and the Board shall set the provisions on expansion and modification and the manner of licensing them.

Article 26

The Kuwaiti courts alone shall have jurisdiction to hear any dispute arising between investment projects and third parties, whoever they may be. It may be agreed to refer such a dispute to arbitration.

Article 27

The Investor may benefit from all or some of the following incentives:
1- Exemption from income tax or from any other taxes for a period not exceeding ten years from the date of commencement of actual operation of the licensed Investment Entity.
2- Exemption of every expansion of the Investment Entity, licensed in accordance with the provisions of this Law, from the same taxes provided for in the preceding paragraph, for a period not less than the period of exemption granted to the original Investment Entity, from the date of commencement of actual production or operation of that expansion.
3- Without prejudice to the provisions of Law No. 10 of 2003 Promulgating the Unified Customs Law of the Cooperation Council for the Arab States of the Gulf, the following imports required for the purposes of direct investment shall be exempted, wholly or partly, from customs taxes and duties or any other fees that may be due on them:
A- Machinery, tools, equipment, means of transport and other technological apparatus.
B- Spare parts and maintenance supplies required for the items listed in the preceding clause.
C- Commodity supplies, raw materials, partly manufactured goods, and packaging and filling materials.
The Investor may not, before the lapse of five years from his notification of the exemption from duties on the items listed in this clause, carry out any kind of disposal of them, including sale, exchange or assignment. Nor may he, during the same period, use them for a purpose other than that for which they were imported, except in accordance with the bases and rules decided by the Board in this regard and upon payment of any taxes or duties that would have been due had the import taken place at the time the disposal is completed.
4- The use of the land and real estate allocated to the Authority or subject to its supervision or management, in accordance with the bases and rules set by the Board in this regard.
5- The employment of the foreign workforce required for the investment, in accordance with the bases and controls issued by a resolution of the Council of Ministers regarding the minimum percentage of national workforce that shall be met.
6- The Council of Ministers may decide to grant certain cases and categories certain incentives and exemptions not mentioned in this Article.

Article 28

The provisions of the preceding Article shall apply to all types of partnerships between the public and private sectors for the purpose of direct investment, including the companies and projects provided for in Law No. (7) of 2008 and Law No. (37) of 2010 referred to above, provided that the Board sets the rules and bases in this regard.

Article 29

The Investor shall submit to the Authority an application to benefit from all or some of the incentives provided for in this Law, simultaneously with or subsequent to the licence application, to be considered by the Authority with the aim of verifying that the bases, rules and procedures set by the Board in this regard are met, and in a manner consistent with the general policy of the State and the approved economic development plans.
The amount, type and duration of the incentives and exemptions granted to investments, each according to its type and nature, shall be linked to all or some of the following criteria:
1- The transfer and localisation of technology, modern management methods and advanced practical, technical and marketing expertise to the State of Kuwait.
2- The quantity and quality of the products and services provided.
3- The need of the local and Gulf market for the direct investment and the extent of its contribution to achieving economic diversification.
4- The increase of national exports.
5- The creation of job opportunities for the national workforce and its training.
6- Contribution to the development of areas lacking similar projects or activities.
7- Positive environmental impact.
8- The extent to which services are provided to the community outside the scope of the project or economic activity carried on.
9- The use of national products.
10- The use of technical, professional and consultancy services of a national character.
The Board may amend the criteria referred to above or add other criteria to them, in a manner consistent with the general policy of the State and the approved economic development plans.

Article 30

A special register named the “Investment Register” shall be kept at the Authority, in which all the Investment Entities licensed in accordance with the provisions of this Law shall be registered, together with all the applications, licences, incentives, exemptions and sanctions related to them, and all the relevant documents and data shall be attached to the register.
The Director General shall issue the necessary decisions setting out the manner of preparing this register, its contents, the registration mechanism and the documents and data required.

Article 31

The Competent Minister shall submit to the National Assembly a copy of the annual report issued by the Authority and a copy of the statistics on the activity and projects of the Authority, within 30 days from the date of their presentation to the Council of Ministers.

Article 32

If the Investor violates the provisions of this Law or the conditions of the Licence, the Board may impose on him one of the following sanctions:
1- A written warning; a more severe sanction shall be imposed if three warnings are issued to the same Investor or to the same Investment Entity within one year from the date of the first warning.
2- Partial or total deprivation of the incentives and exemptions granted to him; the deprivation decision may be reconsidered if the violation is remedied.
3- Temporary administrative suspension.
The Licence shall be deemed cancelled by operation of law if the Investment Entity ceases its activity and the conduct of its business for a period exceeding one year without an acceptable excuse, or in the event of a delay exceeding one year from the date of commencement of actual operation set in the timetable submitted by the Investor to the Authority upon applying for the Licence, without an acceptable excuse; the Executive Regulations shall set the bases and rules necessary in this regard. In other cases, the Licence may not be cancelled or the investment liquidated except by an order issued by the President of the Court of First Instance upon a petition submitted to him by the Authority setting out the grounds for its request.
The Investor may file a grievance against the sanctions provided for in Clauses (2) and (3) of this Article within thirty days from the date of his notification of the sanction decision. The grievance shall be decided within thirty days, and if the grievance is rejected, the decision shall be in writing and reasoned.
The sanctions imposed under this Article and the date of their notification to the Investor shall be recorded in the Investment Register provided for in this Law, in the section relating to the Investment Entity concerned. The imposition of these sanctions shall not prejudice civil and criminal liability.

Article 33

The competent employees designated by the Minister, by a resolution he issues, shall have the capacity of judicial police officers to monitor the implementation of this Law and the regulations and resolutions implementing it. These employees shall perform their work with honesty, integrity and impartiality, and shall undertake not to disclose the secrets of the Investment Entities of which they become aware by virtue of their work. Each of them shall take the following oath before the Minister:
“I swear by Almighty God to perform my work with honesty, impartiality, integrity and truthfulness, and to preserve the confidentiality of the information of which I become aware by virtue of my work, even after the end of my service.”
The said employees of the Authority shall submit a detailed report on the results of their work, upon its completion, to the Director General, who shall refer it to the Board together with his opinion for a decision to be taken on it.

Article 34

An Investor who has obtained a Licence, or whose investment has been granted incentives and exemptions in accordance with the provisions of this Law, shall comply with the following:
1- Notifying the Authority in writing of the date of commencement of the executive procedures and steps necessary to start work in the licensed Investment Entity and of the date of their completion, within a period not exceeding thirty days from the date of each of them.
2- Notifying the Authority in writing of the commencement of actual operation of the licensed Investment Entity within a period not exceeding thirty days from the said date.
3- Complying with the financial and tax rules and instructions issued by the Ministry of Finance, in particular those relating to the submission of tax returns and the obtaining of the tax card.
4- Providing any information, data, statistics or documents that the Authority requests and considers necessary for the implementation of the provisions of this Law.
5- Allowing any of the employees of the Authority authorised by the Director General to enter all the buildings, yards and facilities connected with the licensed Investment Entity, for the purposes of monitoring and follow-up in accordance with the provisions of this Law and of matching the content of the data, information, statistics and documents submitted by the Investor against the actual situation; the said employees of the Authority shall submit a detailed report on the results of their work, upon its completion, to the Director General, who shall decide as he deems appropriate in this regard.
6- In all cases, the Investor shall, in the course of conducting his business, not violate the laws and regulations in force in the country, and shall in particular comply with the duty to preserve the safety of the environment and with the instructions relating to security, public health and public tranquillity, and shall not expose others to danger.

Article 35

All the funds, assets, liabilities and rights of the Foreign Capital Investment Office established under Law No. (8) of 2001 referred to above, and everything relating to it, shall be transferred to the Authority.
Without prejudice to the provisions of Decree-Law No. (15) of 1979 and the Decree on the Civil Service System issued on 4/4/1979 referred to above, the Authority shall have a staff whose members shall be appointed in accordance with the system set by the Board of Directors, including the rules on appointment and the in-kind and cash remuneration granted to employees. The Competent Minister shall, within six months from the date on which this Law comes into force, issue the resolutions necessary to transfer such employees of the said Office as he deems fit to the Authority.

Article 36

The Competent Minister shall issue the Executive Regulations of this Law and the resolutions necessary to implement its provisions within six months from the date of its publication in the Official Gazette.

Article 37

Law No. 8 of 2001 referred to above, and every provision that contradicts the provisions of this Law, are hereby repealed.

Article 38

The Prime Minister and the Ministers, each within his competence, shall implement this Law, which shall come into force six months from the date of its publication in the Official Gazette.

Published in the Official Gazette Kuwait Al-Youm on 16 June 2013.