Learn how to start a new business in Kuwait, including ownership rules, registration documentation, and local payment options.

Want to make more money but don't know how to start a new business in Kuwait? Opening a shawarma stand is not an option these days, thanks to the fierce competition on every corner around the country, even in the desert! Therefore, drop that idea and start thinking out-of-the-box to earn extra dinars.

Thanks to its wealth of natural resources, Kuwait is one of the world's top ten oil exporters. With its growing economy and large expatriate population, the country has also become a destination for entrepreneurs worldwide.

Starting a new business in Kuwait, like in any country, has its own set of challenges, including foreign ownership restrictions, financial reporting, payment processing, labor marketing regulations, and market segmentation.

Therefore, we researched and put together the fundamentals about how to start a new business in Kuwait. In this article, we’ll answer the following questions:

1. Who can start a business in Kuwait?
2. What are the business structure types in Kuwait?
3. What are the best small business ideas to start in Kuwait?
4. How to establish a business in Kuwait?
5. How to facilitate money transactions in Kuwait?

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1. Who can start a business in Kuwait?

First a small note: Small businesses are becoming increasingly important to Kuwait’s economy, which traditionally relied heavily on the oil sector. 

This makes entrepreneurs like you a more common sight. 

According to Zawaya, the small business sector has grown significantly in recent years and now contributes more than 22% of Kuwait’s total GDP. A recent Statista report predicts this figure will increase by $11.7 billion USD between 2023 and 2028. 

These increases attract both investors and small entrepreneurs.

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The following individuals are eligible to establish a business in Kuwait:

Citizens

Kuwaiti nationals are eligible to start a sole proprietorship or partnership in Kuwait.

GCC Nationals

The citizens of member countries in the Gulf Cooperation Council (GCC) have some special permits to establish businesses in Kuwait. These include The United Arab Emirates, Bahrain, Qatar, Oman, and Saudi Arabia.

Foreigners

According to Kuwait Direct Investment Promotion Authority (KDIPA), non-Kuwaiti nationals can establish a business in Kuwait. However, for the company formation, foreigners need a local Kuwaiti partner or GCC national partner, owning at least 51 percent of any business share. This term has been loosened with the foreign direct investment law 2013, which allowed 100% ownership for foreigners if the KDIPA approved it.

According to Rohit Pateria, an entrepreneurial leader and finance professional, “As a foreigner, you will need a local sponsor who is a Kuwaiti citizen or a Kuwaiti-owned company to sponsor your business. They will act as a partner and a liaison between your company and the Kuwaiti government.”

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2. What are the business structure types in Kuwait?

There are many business structure types to consider in Kuwait. According to KDIPA Law No. (1) of 2016, the following types are available:

Limited Liability Company (W.L.L.)

Limited Liability Company is the most popular legal entity for Kuwaitis and others. However, foreigners must have a Kuwaiti national partner with 51% ownership. It is suitable for trading and manufacturing business activities but not allowed for banking, insurance activities, or acting as a pure investment fund.

Establishment (a branch of the corporate for non-Kuwaiti business)

The law doesn’t allow foreign companies to open branches in Kuwait. It is only available for GCC citizens. 

However, for big foreign corporations, there are some exceptions, and if they get a permit from the KDIPA, the best solution is to have:

• A wholly-owned subsidiary in Kuwait
• A Licensed branch
• A Licensed representative office

Kuwait Joint Ventures (K.J.V.)

K.J.V. is the type of company suitable for foreign investors with major projects in Kuwait as it doesn’t need formal establishment processors. But like any other structure, it needs a Kuwaiti national partnership of 51% and at least one director from any nationality who obtains a Kuwait residency permit. 

As the entity doesn’t require registering in the commercial registry of the Ministry of Commerce and Industry, it lasts due to the contract and agreement period.

Partnerships

According to Kuwaiti law for commercial companies, a partnership entity can be of two types: general partnership and limited partnership. 

A general partnership requires at least two individuals to be jointly liable for partnership debts to the extent of their wealth. While in the limited partnership, it includes the general partnership and limited partners with limited liability.

Closed Joint Stock Company (K.S.C.)

A closed joint stock company (K.S.C.) is a shareholding company with at least five shareholders. Kuwaiti nationals must corporate it (with 51% ownership like the W.L.L.). The shares can be freely transferred and can be available for public trading if transferred to public joint stock.

3. What are the best small business ideas to start in Kuwait?

Although starting a business in Kuwait can be daunting, it is worth it. The country is undergoing rapid economic growth, and there are many opportunities for entrepreneurs with good ideas and a hard work ethic.

Kuwait has made significant investments in its infrastructure in recent years. This has created a more favorable environment for business opportunities and made it easier for entrepreneurs to start.

In addition, the Kuwaiti government is supportive of small businesses. There are a number of government programs and initiatives that are designed to help entrepreneurs succeed.

• The National Fund for SME Development (NFSME) offers a variety of loan products, grants, and training programs to help SMEs start and grow their businesses. (You can apply for funding here.) 
• The Kuwait Direct Investment Promotion Authority (KDIPA) offers a variety of incentives and services to foreign investors, including support for setting up businesses, obtaining visas, and finding local partners.(Learn more here.)

For those planning to generate revenue in Kuwait on a smaller scale, many small business ideas can help supplement the income of residents in Kuwait. 

[Looking for some small business ideas to get you started? Read our article on the top 25 most profitable Kuwait business ideas.] 

4. How to establish a business in Kuwait?

Doing business in Kuwait will require lots of preparation and planning; don’t overlook this. Here, we’d recall a quote by Shaikha Al-Bahar, deputy group CEO at the National Bank of Kuwait, “Adopt high standards, cultivate a professional mindset and don’t be afraid to be viewed as decisive.”

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If you want to establish a small business professionally and legally in Kuwait, you will need to follow these steps. 

Determine the business structure

As discussed above, you will need to decide what type of business structure you want to create, such as a limited liability company (LLC) or a joint venture company (JVC).

Choose a company name

The name of your business must be unique and easy to remember, and it should be related to the nature of your business. 

It is important to do your research and check the Kuwaiti Commercial Register to make sure the name you want is available.

Register the business

In general, you will need to register your business with the Kuwaiti Ministry of Commerce and Industry. This will require documentation such as:

1. A copy of your passport
2. A copy of your Kuwaiti residency permit
3. The Articles of Association (AOA)
4. The Memorandum of Association (MOA)
5. A letter of approval from the Ministry of Commerce and Industry
6. Proof of capital deposit in a Kuwaiti bank

Obtain business licenses

Depending on the type of business you are starting, you may need to obtain additional licenses from the government. 

For example, retail stores will need a commercial license. Register with the Chamber of Commerce. You should also register your business with the Kuwait Chamber of Commerce and Industry. This will give you access to networking opportunities, business information, and resources. Even if it’s an e-commerce or a home-based online business, getting the right license is important.

Many businesses in Kuwait operate online from home and work legally under the laws. According to Fajer Ahmed, an attorney in Kuwait, “home business licenses are available in Kuwait, and you can obtain them from Kuwait Business Center under the Ministry of Commerce.”

Here are some additional tips for business setup in the state of Kuwait:

• Hiring a lawyer to help you with the registration process is important. 
• The government will require much information about you and your business before they approve your registration.
• The registration process can take several weeks or even months.

5. How to facilitate money transactions in Kuwait?

It’s no secret that registering a business in Kuwait can be a big challenge for beginners, especially when it comes to payment processing. 

According to Seth Sadeq, co-founder and CEO of Kem, “the hardest part of starting a business in Kuwait is getting the right paperwork and finding a payment solution. But with Kem, you don’t have to worry about signing contracts and dealing with payment providers.”

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So, offering easy-to-use and user-friendly QR code payment methods instead of sending links or other traditional methods is essential, and thanks to the digital age, modern payment solutions such as Kem App now make it easy to receive and send money in Kuwait. 

Kem App also provides an easy-to-sign-up in less than 15 seconds and includes security features such as face ID to keep your business safe and secure. 

Takeaways

• The thriving economy in Kuwait attracts entrepreneurs from all around the world.
• There are several ways of doing business in Kuwait, and the main condition is to have Kuwaiti nationals or GCC citizens as partners. 
• One of the main obstacles for small businesses is to receive payments.
• Innovative solutions such as Kem App solved this problem by providing easy  QR payment codes to use.