Law No. 8/2001
Regulating Direct Foreign Capital Investment In the State of Kuwait
Having reviewed
The Constitution,
Decree No. 3/1955, concerning Kuwait Income Tax, and the Laws amending thereof,
Kuwait Chamber of Commerce Law issued in 1959,
Law No. 15/1960 issuing the Commercial Companies Act and the Laws amending thereof,
Law No. 16/1960 promulgating the Penal Code and the Laws amending thereof,
Law No. 4/1962 concerning Patents, Industrial Drawings and Prototypes as amended by Law No. 3/2001,
Law No. 33/1964 on Expropriation and Provisional Requisition for Public Interest,
Law No. 36/1964 Regulating Commercial Agencies and Laws amending thereof,
Law No. 32/1968 concerning Currency, Central Bank of Kuwait and Regulating of the Banking Business and Laws amending thereof,
Law No. 32/1969 Regulating Commercial Enterprises Licensing and Laws amending thereof,
Law Decree No. 68/1980 promulgating the Commercial Law and Laws amending thereof,
Law No. 58/1982 Ratifying the GCC Unified Economic Agreement,
Law No. 56/1996 promulgating the Industry Act,
Law No. 19/2000 on the Support of National Labor and Encouraging their Employment in Non-Governmental Sector.
The National Assembly approved the Law of the following provisions, and
we hereby ratify and ordain the following Law :
Definitions
Article 1
The following terms and expressions shall have the meanings as indicated here below :
1. Foreign money, securities and commercial papers transferred to Kuwait.
2) Machinery, equipment, transportation means, raw materials and commodities imported from abroad for investment purposes.
3) Corporeal rights such as patents, trade marks, licenses and registered trade names, engineering and technical designs.
4) Profits and earnings of the invested foreign capital added to foreign capital or employed in new investment projects.
Chapter One
On Foreign Capital Investment
Article 2
Without prejudice to the provisions of Article (3) hereof, the Council of Ministers shall determine the economic activities and projects that the foreign investor is allowed to undertake within the State of Kuwait whether independently or in participation with the Kuwaiti nation capital in conformity with the State’s general policy and approved economic development plans.
Article 3
The Foreign investor shall be issued a license for undertaking any economic activity or project vide an order by the Minister pursuant to the Investment Committee’s recommendation, and following the approval of the competent authorities.
License application must be decided within a maximum period of eight months from the date of submission. In case of rejection, the decision must be justified in writing.
Provisions of Clause 1 of Article 23 and Provisions of Article 24 of Law Decree No. 68/1980 referred to hereinabove shall not apply to such license.
Any privilege to invest one of natural resources or public utilities shall be made only pursuant to a law and shall be for a limited period. Preliminary procedures shall guarantee the facilitation of searches, inspection, detection within a transparent and competitive atmosphere.
Such agreements, contracts or onerous contracts granted prior to the promulgation of the Constitution or this Law may only be renewed or amended pursuant to a law.
Article 4
In exclusion of the provisions of Article 68 of Law No. 15 of 1960 indicated hereinabove, and pursuant to an order of the Minister following the Investment Committee's recommendation, license may be issued for incorporate Kuwaiti companies wherein foreigners may own 100% equity of the company capital in accordance with the terms and conditions determined by the Council of Ministers.
Chapter Two
The Foreign Capital Investment Committee
Article 5
A Committee called the Foreign Capital Investment Committee shall be formed under the Chairmanship of the Minister, the formation of which shall be promulgated pursuant to an order by the Council of Ministers. Committee members shall include experts representing the private sector as well as representatives of Kuwait Chamber of Commerce and Industry. The Chief of the Foreign Capital Investment Office indicated in Article 7 hereof, shall act as General Secretary of the Committee. The Committee’s business shall be regulated pursuant to an order to be issued by the Minister, while the remuneration of its members shall be determined vide the order of Council of Ministers.
Article 6
The Investment Committee shall be entrusted with the following tasks :
1) Examination of Investment applications and submitting recommendations thereon.
2) Promotion of Investment opportunities available in the country and taking the initiative towards soliciting foreign investments.
3) Grant incentives necessary to encourage the foreign investor and Kuwaiti private sector to make investments in accordance with Article (13) hereof, in co-ordination with the competent authorities while placing special emphasis on encouraging the Kuwaiti private sector.
4) Facilitate the enterprise’s licensing and registration procedures and eliminating obstacles facing the establishment thereof.
5) Devise a mechanism for monitoring, follow-up and assessing the performance of foreign investments in the country, with a view to identify any hurdles facing such investments and to surmount the same.
6) Investigate the complaints raised by foreign investors and other concerned parties as a result of implementing the provisions of this law, and submit its recommendations thereon to competent authorities.
7) Impose the penalties stipulated in Article (15) hereof.
8) Prepare draft regulations required for the implementation of the stipulations of this law.
9) Consider matters referred to it by the Minister in respect of the implementation of the provisions hereof.
10) Prepare periodic statistical reports on foreign investment activities as well as an annual report on licensed investment projects together with indicating obstacles facing the inflow of foreign investments into the country and ways to remedy the same. Such reports shall be submitted to the Council of Ministers within a period not exceeding the end of March of every year.
Article 7
An office called Foreign Capital Investment Office – (FCIO) shall be set up to act as the executive instrument of the Foreign Capital Investment Committee, to be formed pursuant to an order issued by the Minister which order shall also specify the working rules thereof.
The head of this office shall be appointed vide a Decree to be issued pursuant to the Minister’s nomination.
The FCIO shall receive license applications, complete the same in conjunction with concerned authorities, conduct the required studies and submit recommendations thereon, to be placed before the Investment Committee for deciding thereon within a grace period not exceeding four months from the application date. Such period may be extended to a similar period vide an order of the Minister to be justified in writing.
The FCIO shall act on all matters related to foreign capital investment, particularly :
1. Inform international markets about the enterprises placed for investment and highlight the benefits enjoyed by the foreign capital investment in the country.
2. Provide all necessary information, clarifications and statistics requested by foreign investors.
3. Follow up execution of licensed enterprises and eliminate the obstacles and difficulties which may confront such enterprises.
4. Coordinate with the concerned authorities in order to facilitate the foreign investor’s entry and residence in Kuwait as well as foreign dealers having business connections with him.
Chapter Three
Guarantees Secured for Foreign Investment
Article 8
Foreign enterprises licensed under the provisions of this law may not be confiscated or nationalized.
Expropriation may only be made for public interest in accordance with the laws applicable and against a compensation equivalent to the enterprise’s real economic value at the time of expropriation. Such value shall be assessed according to the economic situation prior to any threat of expropriation. Further the due compensation shall be paid without delay.
Article 9
Without prejudice to the provisions of Article (3) hereof, this law shall apply to existing investments belonging to a foreign capital in conformity with the stipulations of this law, provided that the privileges, exemptions and guarantees accorded to such investments under the provisions hereof shall be not less than those previously granted to the said existing investments. Applications with regard to benefiting from the privileges stipulated herein should be submitted by the foreign investor to the Investment Committee for due consideration.
Article 10
Foreign investor licensed under the provisions of this law shall not be subject to any amendment stipulated herein prejudicing his interests. However, expansions of existing investment made following the enforcement of such amendment shall be exempted.
Article 11
1. The Foreign investor shall be entitled to assign his total investment in full or in part thereof to another foreign investor, or to a national investor, or relinquish the same to his national partner in case of partnership, provided this is done in compliance with the provisions of the law and pursuant license stipulations.
2. If the ownership of a foreign investment is transferred in part or entirely to another foreign investor, this latter investor shall substitute the former to the extent of the ownership transferred him by the former. Further the investment shall continue to be treated according to the provisions of this law.
Article 12
The foreign investor shall be entitled to repatriate his profits and capital as well as the compensation stipulated in Article (8) hereof. Further, non-Kuwaiti workers in the enterprise and dealers therewith existing outside Kuwait may also repatriate their savings and dues.
Chapter Four
Privileges and Obligations of Foreign Investment
Article 13
The Investment Committee may grant foreign investments all or part of the following privileges :
1. Exemption from income tax or any other taxes for a period not exceeding ten years to commence from the actual commissioning of the enterprise as well as exempting every new investment in the same enterprise from such taxes for a period equivalent to that granted to the original investment when the enterprise was established.
2. Privileges offered benefits under double taxation avoidance agreements as well as investment encouragement and protection agreements.
3. Total or partial exemption from customs duties on the following imports :
A. Machinery, equipment, and spare parts required for construction or expansion and development.
B. Raw materials, semi-processed goods, wrapping and packaging materials and such other materials required for production purposes.
4. Allotment of lands and real estates required for their activities in accordance with the laws and regulations applicable in the State of Kuwait.
5. Recruitment of foreign labour required for their activities in accordance with the laws and regulations applicable in the country.
The Council of Ministers shall issue an order determining the ratio of national labour in respect of the projects subject to the provisions of this law.
Granting of the privileges indicated in this Article shall be in line with the economic development plans as well as the number of Kuwaiti workers in the enterprise and with due observance of the provisions of the said Law No. 19/2000 concerning Recruitment of the National labour.
Article 14
The Foreign investor undertakes to protect the environmental safety and comply with the public order and morality as well as the instructions relating to the security, public hygiene and third party safety.
Chapter Five
Penalties
Article 15
The Investment Committee may apply any one of the following penalties to the foreign investor violating the provisions hereof, license conditions, the laws or rules enforced in the country :
1. Warning
2. Injunction
3. Deprivation from part or total granted benefits. However, the foreign investor remedying the respective violation may request reconsideration of the deprivation decision.
4. Administrative suspension of the enterprise for a certain period.
Further, the court may, upon the request of the Investment Committee, rule on withdrawing the license and liquidating the investment.
Without prejudice to the foreign investor’s right to resort to the judiciary, the foreign investor may raise a grievance to Council of Ministers against the penalties provided for in Clauses (3), (4) within thirty days from the date he is notified of the penalty decision. In case of rejecting the complaint, the decision must be justified in writing.
The grievance application not decided within sixty days from the filing date shall be deemed as rejected.
Enforcement of the penalties shall not relieve the foreign investor from the civil and penal liability, whenever applicable.
Chapter Six
Concluding Provisions
Article 16
The Kuwaiti Courts alone shall be competent to consider whatever disputes arising between foreign investment enterprises and third parties. However, the parties may agree to refer such dispute to arbitration.
Article 17
Under the provisions hereof the foreign investor shall enjoy the coverage of the principles of equality and confidentiality of technical, economic and financial information connected with the enterprise, as well as preservation of investment initiatives in accordance with the provisions of the relevant applicable laws.
Without prejudice to any more severe penalty stipulated by any other law, any person divulging any information obtained by reason of his job relating to the investment initiative, technical, economic or financial aspects of foreign investment, made under the provisions hereof, shall be sentenced to imprisonment for a period not exceeding one year and a maximum fine of Kuwaiti Dinar Ten Thousand or either penalty, except in such cases wherein the said disclosure is permitted by law.
Article 18
The Minister shall submit to the National Assembly a copy of the annual report stipulated by Clause (10) of Article 6 hereof within thirty days from presentation date to the Council of Ministers.
Further, the Minister shall submit to the National Assembly every six months a periodic statement comprising all the applications submitted in accordance with Articles (3, 4, 9) hereof and the orders issued in this regard.
Article 19
In the context of foreign investment, all issues not particularly provided for herein shall be subject to the provisions of the laws and regulations applicable in the State of Kuwait, provided that there would not be conflict with the provisions hereof.
Article 20
The provisions of this law shall be applied to the economic activities and enterprises engaged by the national investor having no foreign partner whenever they fall within the activities and enterprises determined by the Council of Ministers in implementation of Article (2) hereof.
Article 21
The Minister shall issue the Executive By-Laws and orders required for the implementation of the provisions hereof within six months of promulgation.
Article 22
The Prime Minister and Ministers, each within his own competence, shall implement this Law.
AMIR OF KUWAIT
JABER AL-AHMED AL-SABAH
Issued at Bayan Palace
On Muharram 23rd, 1422 A.H
Corresponding to : 17 April 2001 A.D.
Published in the Official Gazette (Al Kuwait Al Yawm) - issue no. 510 in 22 April 2001.
