Ministry of Commerce and Industry Resolution No. 502 of 2014 Issuing the Executive Regulations of Law No. 116 of 2013 on the Promotion of Direct Investment in the State of Kuwait

Ministry of Commerce and Industry Resolution No. 502 of 2014
Issuing the Executive Regulations of Law No. 116 of 2013 on the Promotion of Direct Investment in the State of Kuwait

Chapter One – Definitions

Article 1

In applying the provisions of these Regulations, the following words and terms shall have the meanings set out opposite 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.
Law: Law No. (116) of 2013 referred to above.
Investor: a natural or legal person of whatever nationality.
Licence: the investment licence issued in accordance with the provisions of the Law and these Regulations.
Investment Entity: every economic activity licensed in accordance with the provisions of the Law by virtue of an investment licence that grants it legal existence in the State of Kuwait.
Capital: whatever is employed or used directly for the purposes of Direct Investment in an Investment Entity subject to the provisions of the Law, including:
1) cash and financial and commercial securities, whether local or foreign.
2) machinery, tools, equipment, means of transport and other technological devices.
3) raw materials and goods supplies necessary for the commencement of 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) the profits and returns of the invested capital, if the capital is increased by them or they are employed or used for the purposes of Direct Investment in an Investment Entity licensed in accordance with the provisions of the Law and these Regulations.
Direct Investment: the investment made through the Investor’s employment, alone or in partnership with another Investor, of its capital directly in an Investment Entity within the State of Kuwait that is licensed in accordance with the provisions of the Law.
Application: the application submitted by the Investor to obtain, as the case may be, the Licence, the incentives or the merger of Investment Entities, in accordance with the bases and rules specific to each case.
Activity: every activity of economic effect through which Direct Investment is made, except for the activities set out in the list of investments whose activities are excluded from the provisions of the Law, on which a decision of the Council of Ministers is issued.
Investment Register: the register in which are recorded the data relating to Investment Entities and any changes to them, including building permits and the other licences, approvals, permits and authorisations necessary for the commencement of operation, which are issued by the competent authorities.
Commencement of Implementation: the commencement of the procedures and preliminary works that precede the commencement of operation in the Investment Entity.

Chapter Two – The Direct Investment Promotion Authority

Article 2

The Authority shall undertake the works that ensure the achievement of its objectives and competences set out in the Law, and shall carry out the tasks and powers assigned to it by the Council of Ministers or the Competent Minister that relate to its objectives or that would promote Direct Investment in the country, develop and improve the investment environment, facilitate procedures and remove obstacles facing Investors.

Article 3

The Chairman and members of the Board and the Director General shall each disclose their interests and the interests of their spouses and first-degree relatives in any project or service presented to the Board of Directors, and they shall in all cases refrain from participating in the discussion of, or in taking, any decision connected with that project or service; in the event of a violation, that decision and everything resulting from it shall be void. The disclosure shall be submitted in writing to the Secretariat of the Board, which shall present it to the Board when the project or service is discussed, and the disclosure shall state the interest referred to.
The employees of the Authority shall likewise make the disclosure referred to, which shall be submitted to the Director General, stating the interest and its connection with the competences and tasks assigned to them.

Chapter Three – The One-Stop Shop

Article 4

An administrative unit called the One-Stop Shop shall be established within the Authority, to which a sufficient number of employees of the government entities determined by the Board shall be attached.
The One-Stop Shop shall be competent to complete the transactions relating to the Investor’s establishment of the Investment Entity and any expansions of and changes to it, as well as the issuance and renewal of the related approvals, permits and licences, and whatever the Director General assigns to it.
The One-Stop Shop shall be competent to prepare guidance manuals, approved by the Director General, setting out the requirements for completing transactions, and it shall respond to the enquiries raised about them.

Article 5

The Authority shall establish a list of the specialised companies, establishments and offices that are qualified and approved to be permitted to submit and follow up Applications in the name and on behalf of the Investor, so that their services may be used if the Investor so wishes.

Article 6

Coordination shall take place between the Authority and the government entities represented in the One-Stop Shop regarding the administrative supervision of the employees who represent them in the One-Stop Shop.
These employees shall be authorised by the entities they represent to exercise the competences necessary to complete the transaction without referring to a higher authority to take the appropriate decision or measure, and they shall be provided with all the data, information, forms and everything necessary to complete the works falling within their competence, including the following:
1. Receiving and delivering all papers, applications, documents, contracts, permits, licences, approvals, receipts and fees, taking all procedures, issuing all the necessary approvals and decisions concerning them, and following them up, if necessary, with their original entities.
2. Providing the services falling within the competences of their original entities at the premises of the One-Stop Shop, and following them up, if necessary, with their original entities.

Article 7

The Director General shall supervise the work system within the One-Stop Shop and shall establish the rules, mechanisms, procedures and indicators that ensure the speed and accuracy of completing the transactions falling within its competences. He shall also establish and supervise a follow-up system that includes receiving the complaints and suggestions submitted by the persons concerned regarding the progress of their transactions, and taking the necessary procedures, measures and decisions in this regard.

Chapter Four – The Investment Entity and Applications Submitted to the Authority

Article 8

Without prejudice to the provisions of Articles (11) and (12) of the Law, Direct Investment activities shall be licensed in accordance with the provisions of the Law and these Regulations through an Investment Entity specified in accordance with any of the following forms:
1) A Kuwaiti company established in accordance with the provisions of the Companies Law referred to above for the purpose of Direct Investment; the share of the foreign Investor may reach (100%) of the capital of a shareholding company, a limited liability company or a single person company.
2) A branch of a foreign company licensed to operate within the State of Kuwait for the purpose of Direct Investment.
3) A representative office whose purpose is limited to studying markets and production possibilities, without engaging in commercial activity or the activity of commercial agents.

Article 9

Subject to the provisions of Article (12) of the Law, the Board shall establish the bases and rules for licensing each form of the Investment Entities referred to in the Law.
The Authority shall prepare the application forms for the transactions falling within its competence, in particular the following:
1. Licensing the Investment Entity.
2. Granting incentives and exemptions.
3. Amending the name, address, purpose, capital or seat of the Investment Entity.
4. Amending the shareholding percentages in the ownership of the Investment Entity.
The Competent Minister shall determine the consideration for the services provided by the Authority.

Article 10

The Authority shall receive the Applications, papers and documents submitted by the Investor or by whoever represents it, and receipt may take place through any other means determined by the Authority, including registered mail or electronic mail.
The Authority shall deliver to the applicant a receipt evidencing the acceptance of its application for study, after verifying that it satisfies all the required conditions, data and documents.

Article 11

The Authority shall prepare a register for recording Applications according to their type and order of receipt, in which the following data in particular shall be recorded:
1 – The type and number of the Application.
2 – The date on which the Investor received the receipt provided for in the preceding Article.
3 – The name and address of the Investor and the data necessary to identify it.
4 – The type of Activity and the form of the Investment Entity.
5 – The appropriate means of notification determined by the Authority.

Article 12

Applications submitted shall be decided upon in accordance with the provisions of the Law and these Regulations, and the necessary decisions and correspondence concerning them shall be issued under the signature of the Director General, provided that the Investor is notified of the decision of acceptance or rejection; in the event of rejection, the rejection decision shall be in writing and reasoned.

Chapter Five – Requirements for Licence Applications

Article 13

Without prejudice to the provisions of the Law and these Regulations, the Licence application shall satisfy the information, data or documents required by the competent authorities, which shall be valid, and the Investor shall state the time schedule for each of the Commencement of Implementation and the commencement of operation.

Article 14

For a Licence application to establish a Kuwaiti company to be accepted, it shall be accompanied by a preliminary study that includes, in particular, the following:
1) The type of Activity or project proposed to be undertaken.
2) The legal form of the company for which a licence is requested.
3) The size of the investment.
4) The structure and sources of financing.
5) The economic and environmental impact.
6) The expertise and capabilities of the Investor.
7) The needs of the Investment Entity for national and foreign labour, land areas, raw materials and goods supplies, and the sources for providing them.
8) The estimated quantity of water and energy required annually.
9) Any data or clarifications requested by the Authority before or after the submission of the Application.

Article 15

The Licence application for a branch of a foreign company shall include a preliminary study of the same data provided for in the preceding Article, in addition to a certified copy of the company’s memorandum of association and articles of association, its latest audited balance sheet, and evidence that it is still in existence and carrying on its activity.

Article 16

The Licence application for a representative office shall be accompanied by a statement that includes, in particular, the following:
1) The purpose of establishing the office.
2) A certified copy of the foreign company’s memorandum of association and articles of association, its latest audited balance sheet, and evidence that it is still in existence and carrying on its activity.
3) Any data or clarifications requested by the Authority before or after the submission of the Application.

Article 17

The Authority shall decide on the Licence application within thirty days from the fulfilment of all the conditions, data, papers and documents required by the Authority and the competent authorities.
If the Authority approves the Licence application, the procedures for establishing the Investment Entity and obtaining the commercial licence shall proceed.
The Licence shall then be issued by a decision of the Director General.

Article 18

The Investment Entity shall obtain the approvals necessary for the Commencement of Implementation within one year from the date of issuance of the Licence, unless the time schedule submitted to the Authority specifies a longer period.
The Director General may approve granting the Investor an additional period if it shows acceptable reasons, provided that this period does not exceed one additional year.
The Board may grant it a further period exceeding the period provided for in the preceding paragraph.
The Investor shall also notify the Authority of the date of the actual commencement of operation within thirty days from that date.

Chapter Six – Incentives and Exemptions

First – Procedures for Obtaining Incentives and Exemptions

Article 19

The Investor shall submit to the Authority an application to obtain the incentives and exemptions provided for in Article (27) of the Law on the form prepared for this purpose, together with or after the submission of the Licence application, provided that the application satisfies the conditions, rules and procedures established by the Board in this regard.

Article 20

The enjoyment by an Investment Entity with multiple Activities of the incentives and exemptions, including tax exemptions, shall be limited to the Activity for which the Authority has approved the enjoyment of the incentive or exemption.

Second – Tax Exemption

Article 21

Every Investment Entity licensed in accordance with the provisions of the Law shall keep regular accounts under the supervision of one or more licensed auditors.
If the Investment Entity carries on more than one Activity subject to the provisions of the Law and these Regulations, the period of the tax exemption shall be calculated for each Activity separately from the date of its actual commencement of operation, and separate regular accounts shall be kept for each Activity.

Article 22

The Investor may benefit from exemption from income tax or from any other taxes for a period not exceeding ten years starting from the date of the actual commencement of operation of the Investment Entity, provided that it submits a tax return for the exempted Investment Entity in accordance with the deadlines determined by the Ministry of Finance.

Article 23

The application to obtain the tax exemption shall be submitted to the Authority on the form prepared for this purpose, and the application shall be evaluated and the period and value of the exemption determined by the Authority in coordination with the competent authorities, in accordance with the provision of Article (29) of the Law. The Board may establish the bases, rules and criteria it deems appropriate in this regard.
The Investor shall comply with the financial and tax instructions issued by the Ministry of Finance, in particular those relating to the submission of the tax return and any documents, data or clarifications it requests for the application of the exemption.

Article 24

The Director General, after verifying the accuracy of the data of the notification provided for in Article (13) of these Regulations and verifying the actual commencement of operation, shall deliver to the person concerned, within fifteen days from the date on which the notification reaches him, a tax exemption certificate specifying the field of Activity and the date of the actual commencement of operation, and shall send a copy of it to the Ministry of Finance; the said certificate shall be conclusive before all the entities concerned.
The preceding provisions shall apply to an expansion of an existing Investment Entity, and in this case the tax exemption shall take effect from the date of the commencement of the actual production or operation of that expansion.

Third – Customs Exemption

Article 25

The application to obtain exemption from customs taxes and duties shall be submitted to the Authority on the form prepared for this purpose, accompanied by a list of the materials that are the subject of the application.
Customs exemption applications shall be evaluated in accordance with the bases, rules and criteria established by the Board.
The customs exemption certificate shall be issued by the Director General and shall be invocable against all the entities concerned.

Article 26

The Authority shall coordinate with the General Administration of Customs and the other entities concerned to determine the mechanisms of cooperation for arranging the technical and procedural aspects connected with customs exemption applications, in terms of approving the import lists of the Investment Entities that are the subject of the application.

Article 27

The Investment Entity shall enjoy total or partial exemption from customs duties and taxes in accordance with the provisions of the Law and these Regulations, subject to the following:
1) The import shall be made in the name of the Investment Entity or for its benefit.
2) The imported materials shall, in terms of quantity and quality, be consistent with the nature and needs of the Investment Entity’s Activity.

Article 28

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 Investment Entity may be exempted, totally or partially, from customs taxes and duties or any other fees that may be due on the imports necessary for the purposes of the Investment Entity, including:
1) Machinery, tools, equipment, means of transport and other technological devices.
2) Spare parts and maintenance supplies necessary for the items in the preceding Clause.
3) Goods supplies, raw materials, semi-manufactured goods, and packaging and packing materials and supplies.

Article 29

An Investment Entity that has obtained the customs exemption shall keep a register recording the machinery, equipment, devices, means of transport, spare parts, supplies, materials, goods and requisites subject to the said exemption.

Fourth – Allocation of Land and Real Estate

Article 30

The Board shall establish the bases, rules and criteria on the basis of which applications to use the land and real estate allocated to the Authority or subject to its supervision or management are evaluated, the areas that may be allocated to the applicant are estimated, and the manner of allocation is determined.

Fifth – Transformation of the Investment Entity

Article 31

After obtaining the approval of the competent authorities, two or more Investment Entities may merge, and the new entity resulting from the merger shall be the legal successor of the merged entities and shall take their place in rights and obligations.

Article 32

The new entity shall automatically enjoy the shortest of the remaining periods of the exemption and incentives granted to any of the merged Investment Entities.
The new entity may submit to the Authority an application to enjoy other exemptions and incentives by which it completes the period of ten years provided for in Article (27) of the Law.

Article 33

If an Investment Entity is divided into two or more Investment Entities, the entities arising from the division shall be the successors of the divided entity and shall take its place in rights and obligations, within the limits of what has passed to them from the entity subject to the division and in accordance with what the division decision contains.

Article 34

If the Investment Entity is transformed from one form into another, or if the licensed company is transformed from one legal form into another, the transformation decision shall not affect the rights and obligations arising, whether in respect of the Investment Entity, the Investor or third parties in good faith.

Chapter Seven – Grievances

Article 35

The Board shall form a committee to receive grievances, consisting of at least three members, from among whom it shall designate a chairman, and which shall be competent to receive grievances from the persons concerned regarding the decisions issued by the Authority.
The grievance shall be filed before the committee within thirty days from the date on which the person concerned is notified of the decision or becomes aware of it.

Article 36

The grievance shall be accompanied by the documents supporting it, and shall include, in particular, the following:
1) The name, capacity and address of the grievant, and its contact details.
2) The date of issuance of the decision against which the grievance is filed, and the date on which the grievant was notified of it or became aware of it.
3) The subject of the grievance and the grounds on which it is based.

Article 37

Grievances shall be submitted to the Secretary of the Board, who shall notify the Director General of them immediately upon their receipt; grievances shall be recorded in the register prepared for this purpose, and the grievant shall be given a receipt bearing the registration number and date.

Article 38

The grievance shall be presented to the chairman of the committee, who shall set a date for a session to consider it and shall notify the grievant of it so as to appear before the committee in person, through an agent or through whoever represents it; the committee may request from the persons concerned such clarifications and documents as it deems fit.

Article 39

The committee shall decide on the grievance by a reasoned decision within thirty days from the date of its registration; the deliberations of the committee shall be confidential, its decisions shall be issued by majority, and the decisions of the committee deciding on the grievance shall be final.

Chapter Eight – Judicial Police Powers

Article 40

All Investment Entities shall be subject to the supervisory rules, systems and instructions established by the Authority, provided that the Authority coordinates in this regard with the Ministry of Commerce and Industry and the other entities concerned.

Article 41

The Competent Minister shall issue a decision determining the employees who have the capacity of judicial police officers to monitor the implementation of the provisions of the Law, the Regulations and the decisions implementing it.
Those who have the capacity of judicial police officers shall, in the course of carrying out their supervisory and follow-up work, have the right to do the following:
1) Enter all premises belonging to the Investment Entities.
2) Inspect all the documents and data they request, in particular registers, books, documents, records, tapes, computer systems and any other media for storing or processing data.
3) Draw up reports establishing violations and refer them to the competent departments of the Authority.
The Investment Entity shall facilitate the task of whoever has the capacity of judicial police officers and provide him with whatever of the above he requests.

Article 42

The employees of the Authority who have the capacity of judicial police officers shall, when carrying out their work, abide by the following:
1) The judicial police work shall be carried out during official working hours and in the premises belonging to the Investment Entity.
2) The supervisory and follow-up work shall be carried out on the activities licensed by the Authority, and the purpose of this work shall be to verify the proper application of the provisions of the Law and of the regulations and decisions implementing it.

Article 43

The employees of the Authority who have the capacity of judicial police officers shall, immediately upon completion of their work, submit a detailed report on its results to the Director General, who shall refer it to the Board accompanied by his opinion so that the necessary decision or measure may be taken in this regard.

Chapter Nine – The Investment Register

Article 44

A special register called the Investment Register shall be prepared at the Authority, in which shall be recorded all Investment Entities licensed in accordance with the provisions of the Law, and all Applications, Licences, incentives, exemptions, penalties and data connected with them; all the related documents and data shall be attached to the register.
The Director General shall issue the decisions concerning the preparation of this register, its content, the mechanism of registration in it, and the documents and data required for it.

Article 45

An Investment Entity licensed by the Authority or that has obtained incentives or exemptions in accordance with the provisions of the Law and these Regulations shall notify the Authority in writing of any judgments, decisions or procedures that would affect the Activity of the Investment Entity or its continuity.
Any interested party may notify the Authority of the judgments, decisions and procedures referred to in the preceding paragraph, and they shall be entered in the Investment Register.