Getting into the market
Normally doing business in Kuwait necessitates an agent, distributor or commercial representative. Another alternative is to form a registered legal company in the country. Although non-Kuwaitis are not permitted to carry out commercial activities without a Kuwaiti partner whose stake in the business is not less than 51 per cent, there are exceptions where foreign companies can have 100 per cent equity. Other options are applying for a licence under foreign investment law or setting up a joint venture agreement.
Since family structures shape the business environment, personal relationships are paramount and UK firms need to take the time and effort to visit the country and develop close links with partner organisations. Product training for local staff is also vital.
Before visiting the market it is advisable to undertake as much forward planning and market research as possible in the UK.
Kuwait uses the Harmonised International System Code for classifying imports and exports. A customs duty of five per cent is levied on imported goods (including freight and insurance). Staple foods are exempt but tobacco attracts a 100 per cent duty. Foreign companies pay a flat rate of 15 per cent on profits. There is a Double Taxation agreement between Kuwait and the UK. There is no personal income tax.
Most tenders and contracts are handled by the Central Tenders Committee, an independent government agency, although the university, ports, housing and some government ministries are exempt. Foreign companies bidding for government contracts need to be registered in the country and have a Kuwaiti agent. All government tenders are published in Al Kuwait Al Youm, the official gazette. A bond of between 2.5 and 5 per cent of the value of the bid needs to be submitted.
If you do secure a public sector contract you will need to make sure that you comply with Kuwaiti employment law and ensure that the correct ratio of Kuwaiti nationals are employed in the venture. With Kuwait attempting to reduce the imbalance between foreign and domestic labour, it is recommended that local employees are hired wherever possible.
Care needs to be taken with documentation. Arab-British Chamber of Commerce (A-BCC) Certificates of Origin required for all goods. These should state: "We hereby certify that the goods enumerated in this invoice are not of Israeli origin nor do they contain Israeli materials and are not being exported from Israel." These certificates, which can be issued by Chamber International or other authorised chambers, must be certified by the A-BCC and legalised by the Kuwaiti Embassy. The same applies to invoices and agreements. Other documents need to be authenticated by the Foreign & Commonwealth Office and legalised by the Kuwaiti Embassy.
Certificates of health are required for animals. Foodstuffs require certificates issued by the Department for Food, Environment and Rural Affairs (DEFRA). A separate packing list is needed if the information is not contained in the invoice.
All export goods to Kuwait are subject to a pre-shipment inspection. The rules governing this change frequently so you will need to check with the customer or shipper. There are strict prohibitions on all goods from Israel as well as alcohol, goods for making alcoholic drinks such as wine kits, hops and malt extracts, arms and ammunition, unlicensed drugs and medicines, explosives, pornography, pork products and politically subversive materials.