KDIPA, the Past and the Future
Corporate Structuring / Kuwait
Ahmed El Fass Senior Associate,Corporate Structuring
In a jurisdiction whose laws feature various restrictions on foreign ownership (including, but not limited to, restrictions on ownership of real estate pursuant to Law No. 74 of 1979 Regulating the Ownership of Real Estate by Non-Kuwaitis (the “Real Estate Ownership Law”), and the general restriction on ownership of legal entities provided in Article 23 of Law No. 68 of 1980 Promulgating the Commercial Law, which stipulates that foreign investors may not own in excess of forty-nine percent (49%) of the equity interests in Kuwaiti companies), the Kuwait Direct Investment Promotion Authority (“KDIPA”) was established for the purpose of improving the business environment and promoting direct foreign investments in Kuwait.
In furtherance thereof, Law No. 116 of 2013 for the Promotion of Direct Investment in Kuwait (the “FDI Law”) allows foreign investors to own up to 100% of Kuwait entities in non-restricted sectors provided that an investment license is obtained from KDIPA.
The FDI Law provides that a license permitting foreign ownership in excess of the foreign ownership restriction may be sought for: (i) limited liability, shareholding and single person companies; (ii) branch offices of a foreign companies; or (iii) a representative office whose main purpose is limited to the study of markets and production.
In 2015, Al Tamimi & Company (Kuwait office) worked alongside KDIPA and the Kuwait Ministry of Commerce and Industry and IBM to establish the first wholly foreign owned single person company in Kuwait in favour of the American IT leader IBM. Securing the first foreign investment license opened the door for other multinational corporations to establish their presence in Kuwait by establishing entities through KDIPA.
KDIPA offers a wide range of incentives to foreign investors (i.e., income tax and customs exemptions or moratoriums). However, in order to enjoy KDIPA’s privileges and be able to establish a wholly owned foreign entity under KDIPA, KDIPA takes a number of factors into consideration vis-à-vis the proposed investment, including but not limited to:
Job opportunities for Kuwaiti nationals;
Transfer of technology and localization;
Training courses for nationals;
Utilization of local suppliers of goods and services;
Supporting small and medium enterprises;
Contribution to diversification of Kuwait’s economic base; and
Introduction of unique forms of technology, know-how or processes into the Kuwait market.
KDIPA evaluates applications for investment licenses through a point scoring mechanism to determine whether the application is rejected or accepted, and whether incentives shall be granted.
The incentives that may be granted by KDIA under the FDI Law consist of exemptions/moratoriums on income tax or any other taxes for a period not exceeding ten (10) years from the date of the actual commencement of operations of the licensed investment entity, as well as exemptions on custom duties.
As Kuwait continues to position itself as a hub for innovation and business growth, the efforts of KDIPA play a pivotal role in attracting foreign investment and fostering a dynamic, diversified economy.
Bidding on TendersFurther, the foreign investor will benefit from an exception to the conditions for eligibility to participate in public tenders (i.e., government procurement projects) referenced in Article 19 of the Decree No. 30 of 2017 Issuing Executive Regulations of Law number (49) for the year 2016 concerning Public Tenders (“CAPT Bylaws”). Article 19 of the CAPT Bylaws sets out the conditions that the applicant submitting a classification application (i.e., to become eligible to bid on certain public tenders) for the first time or an application for upgrading the classification shall fulfill.
Item (2) of Article 19 of the CAPT Bylaws states that “the applicant company should have been established or the business should have been exercised for three years”. While item (5) of the same Article states that “the applicant company or the individual should have participated in or executed government projects in the State of Kuwait in the classification field through the Agency, the other government entities or the companies and corporations affiliated to the government in the State of Kuwait, except category four where they are allowed to submit works not executed by the government sector provided that they provide a copy of the construction license so that the Agency assesses the works and decides on its sufficiency in order to grant the applicant the requested classification category or not”.
However, Item (8) of Article 19 states that “the Kuwaiti companies that are licensed to invest as per the provisions of FDI Law shall be exempted from the provisions of Clauses 2 and 5 provided that they submit the license to the classification committee at the Central Agency for Public Tenders”.
As such, KDIPA offers foreign investors the opportunity to bid on projects directly without having to satisfy the conditions mentioned under items (2) and (5) of Article 19 of the CAPT Bylaws.
Real Estate OwnershipFurthermore, the Kuwait Ministry of Justice recently issued the Law 7 of 2025 amending certain articles in the Real Estate Ownership Law. An amendment to Article 8 stated “Investment entities licensed under the provisions of [the FDI Law] may own real properties necessary for carrying out and managing their activities or for housing any of their investors or employees, provided that the purpose of this ownership is not property speculation. A decree shall be issued outlining the rules and controls governing such authorization and specifying the areas where such real properties may be owned, including all the conditions, controls and restrictions relating to disposing of, or mortgaging such real properties.”
This provides additional incentives to foreign investors with regard to ownership of real state in Kuwait.
Despite some challenges that face foreign investors as entities that lie under KDIPA’s supervision, and liquidations by a number of entities formed through KDIPA for various reasons, there is still a notable and growing interest by multinational corporations in establishing their legal presence in Kuwait through KDIPA.
As Kuwait continues to position itself as a hub for innovation and business growth, the efforts of KDIPA play a pivotal role in attracting foreign investment and fostering a dynamic, diversified economy. With its commitment to Vision 2035, KDIPA is helping to shape a future where Kuwait thrives as a global leader in investment, technology, and sustainable development.
Our law firm has proudly represented over half of the companies registered with KDIPA providing expert legal guidance and support to businesses navigating Kuwait's investment landscape. With our deep understanding of local regulations and commitment to delivering tailored solutions, we help our clients achieve success in one of the most dynamic and growing markets in the region.
For further information,please contact Ahmed Elfass.
Published in June 2025
