Kuwait. Treasury Management Profile Together we thrive

Transcription

1 Kuwait Treasury Management Profile 2018 Together we thrive

2 2 3 Contents Introduction and Purpose Introduction and Purpose 3 Legal and Regulatory 6 Taxation 8 Banking 13 Payment Instruments 14 Kuwait This is one of a series of Treasury Management Profiles designed for finance and treasury professionals worldwide. By providing a snapshot of banking, payments and cash management in selected locations, these profiles can help treasury managers to make informed decisions, manage risks effectively and take advantage of new opportunities. However, this information is not intended to be comprehensive and does not constitute financial, legal, tax or other professional advice. Accordingly you should not act upon the information contained in this document without obtaining your own independent professional advice. The materials contained in this document were assembled in May 2017 (unless otherwise dated) and were based on the law enforceable and information available at that time. Payment Systems 15 Cash Management 17 Electronic Banking 18 Trade Finance 20 Useful Websites 22 Facts and Figures Capital/Other major cities: Kuwait City/Ahmadi Area: 17,818km 2 Population: 4.1m Language: Currency: Arabic Country telephone code: 965 Weekend: National holidays: Source: Kuwaiti dinar (KWD) Friday and Saturday Jan, 25, 26 Feb, 13 Apr *, Jun *, 20, * Aug, 11 Sep *, 20 Nov * Jan, 25, 26 Feb, 2 Apr *, 4 6 Jun *, 9, * Aug, 1 Sep *, 9 Nov * Business hours: 08:30 12:00 and 16:30 20:00 (Sun Thu), 16:30 20:30 (Fri) Banking hours: Stock exchange: Leading share index: Sectoral distribution of GDP (% of GDP): Source: publications/resources/the-worldfactbook/index.html. 08:30 13:00 (Sun Thu) Kuwait Stock Exchange (KSE) Kuwait Stock Exchange Index (KWSEIDX) Agriculture 0.4%, Industry 58.7%, Services 40.9% (2017 estimate) * The date shown may vary by plus or minus one day. These dates are derived by converting from a non Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian calendar. Some of these dates cannot be determined in advance with absolute accuracy, even by the governing authorities. In the case of Muslim dates in particular, the feast days are determined by the sighting of a new/full moon. Government Legislature Constitutional monarchy with a unicameral parliament, the National Assembly (Majlis al-umma). National Assembly: 50 members are elected to serve four year terms. Sixteen cabinet members are appointed by the prime minister. Elections to the National Assembly were last held in November Head of state Emir H H Sheikh Sabah al-ahmad al-jaber Al Sabah, head of state since 29 January Political leader Jaber Al-Mubarak al-hamad al-sabah, prime minister since 30 November The prime minister is elected every four-years. There is no limit to term length.

3 4 5 Country credit rating Fitch Ratings rates Kuwait for issuer default as: Term Issuer Default Rating Short F1 + Long Long-term rating outlook AA Stable Source: April Economy Exchange rate & Interest rate (%) Consumer inflation & GDP volume growth (%) Q1 Q2 Q3 Q Exchange rate * (USD/KWD) Interest rate * (lending rate) ** (%) Unemployment (%) NA NA NA NA NA NA NA NA Consumer inflation *** (%) GDP volume growth *** (%) NA NA NA NA GDP (KWD m) 42,512 48,722 49,392 46,564 34,315 33, GDP (USD bn) GDP per capita (USD) 49,375 50,893 48,516 43,644 29,306 27,395 BoP (goods/services/income) as % GDP Exchange rate (USD/KWD) Interest rate (lending rate) Consumer inflation % GDP volume growth % * Period average. ** Weighted average of rates charged by local banks for KWD credit facilities to residents and non-residents. *** Year on year. Sources: IMF, International Financial Statistics, April 2018 and 2017 Yearbook; and World DataBank. Sources: IMF, International Financial Statistics, April 2018 and 2017 Yearbook; and World DataBank.

4 6 7 Legal and Regulatory KWD facilities to non residents are only permitted for government contracts. Central Bank approval for contracts above KWD 40 million is required. Central bank The Central Bank of Kuwait is an autonomous institution operating in accordance with Law No 32 of 1968 concerning Currency, the Central Bank of Kuwait and the Organisation of Banking Business. Bank supervision The Central Bank of Kuwait supervises the banking sector in Kuwait. Resident/non-resident status A shareholding company, a holding company or a limited liability company that is registered in Kuwait will hold Kuwaiti nationality. Commercial companies incorporated abroad may have agencies in Kuwait, provided that the agent holds Kuwaiti nationality. A commercial company that is incorporated in Kuwait shall be entered in the Commercial Register of the Ministry of Commerce and Industry, regardless of whether it has a head office, branch or agency in Kuwait. Bank accounts Resident Foreign exchange accounts can be held by residents both domestically and abroad. Resident domestic currency (KWD) accounts cannot be held abroad, but are freely convertible into foreign currency. Non-resident Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts are freely convertible into foreign currency. KWD facilities to non residents are only permitted for government contracts, and prior approval from the Central Bank is required for contracts above KWD 40 million or facilities exceeding 70% of contract value. Interest can be offered on savings accounts. Overdraft facilities are available to residents and non residents. Reporting All transactions between residents and non-residents must be reported to the Central Bank of Kuwait on a monthly basis for balance of payments purposes. Banks are responsible for submitting transactions data to the Central Bank of Kuwait on behalf of their clients (although the accuracy of all reported information remains the resident s responsibility). Exchange controls Kuwait is a member of the Gulf Cooperation Council (GCC), alongside Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). A GCC common market, launched in 2008, is expected to lead to monetary union and a single currency between all six GCC member states. The Kuwaiti dinar (KWD) is Kuwait s official currency. Kuwait does not apply exchange controls. Non-resident investors are not permitted to hold more than a 49% stake in Kuwaiti companies. Non-residents are permitted to establish 100%-owned subsidiaries, subject to the stipulations in the Foreign Direct Investment Law (No 116 of 2013), and with prior approval by the Council of Ministers. Anti-money laundering/counter-terrorist financing 1 Kuwait has enacted anti-money laundering and counter-terrorist financing legislation. Notable legislation includes: Law No 106 of 2013, supplemented by several Resolutions and Central Bank of Kuwait Instructions. Kuwait is a member of the GCC which is a member of the Financial Action Task Force (FATF). It is also a member of the Middle East & North Africa Financial Action Task Force (MENAFATF). The Kuwait Financial Intelligence Unit (KFIU), the country s financial intelligence unit, is an independent entity operating under the auspices of the Central Bank of Kuwait. Account opening procedures require formal identification of the account holder and beneficial owner(s). Financial institutions are required to conduct risk based ongoing due diligence. Financial institutions must identify customers making an occasional transaction, or a series of linked transactions, of KWD 3,000 and above within 24 hours. Relationships with shell banks are prohibited. Financial institutions in the broadest sense must record and report all suspicious transactions to the KFIU within two working days. Financial institutions are required to keep records of customer identification and of all transactions for at least five years after the business relationship has ended. Any individual who enters Kuwait with domestic or foreign currency, gold bullion or any other precious materials exceeding KWD 3,000 in value must inform the customs authorities. 1. Data as at March 2017.

5 8 9 Taxation 1 Resident/non-resident The taxable presence of a foreign entity is determined by whether it carries on a trade or business in Kuwait and not on whether it has a permanent establishment or place of business in Kuwait. Foreign corporate bodies carrying on a trade or business in Kuwait are liable to corporate income tax with the exception of entities that are registered in GCC countries and fully owned by Kuwait/GCC citizens. The term corporate body refers to an association that is formed and registered under the laws of any country or state and is recognised as having a legal existence entirely separate from that of its individual members. Partnerships fall within this definition. Foreign companies can operate in Kuwait either through an agent (or as the minority shareholder in a locally registered company), or by establishing operations in the Kuwait Free Trade Zone (operations limited to the Kuwait Free Trade Zone). There is no difference in principle in the method of calculating taxation in either instance. In the latter case, tax is levied on the foreign company s share of the profits, adjusted for tax (whether or not this is distributed). Tax authority Department of Income Tax. Tax year/filing The tax year is the same as the Christian calendar year, but the Director of Income Taxes may authorise a company to keep its books on a different basis (e.g. if the overseas parent follows a financial year-end other than 31 December). The tax declaration for each taxable period must be submitted within three and a half months of the end of the taxable period. A foreign entity can request an extension of up to 60 days for filing the tax declaration provided a request for an extension is submitted on or before the 15th of the second month following the end of the taxable period; otherwise, the request will not be considered. Tax can be paid as a lump sum or in four instalments on the 15th day of the fourth, sixth, ninth and 12th month following the end of the tax year. If an extension is granted, no tax payment is necessary until the declaration is filed. However, payment must then be made for the first and second instalment. Consolidated returns are not permitted and each company must file a separate return. Corporate taxation Fully Kuwaiti-owned businesses in Kuwait, or businesses registered in GCC countries, are not liable to income tax. The profits, including capital gains, of foreign corporate bodies from their activities in Kuwait, are subject to corporate income tax. The company tax rate is 15% and is applied at a flat rate. A tax exemption is possible for profits earned by entities from trading operations on the Kuwait stock exchange, whether directly or through portfolios of investment funds; for profits generated from activity carried out in the KFTZ; and for profits from activity under the Foreign Direct Investment Law (on a tax credit basis, using certain multipliers). Further, under the Capital Markets Authority (CMA) Law No 22 of 2015, a broad exemption is granted on all remuneration earned by investors through trade on the Kuwait Stock Exchange; however, the Kuwait tax department has yet to issue executive circulars regulating the application of this exemption. The maximum deduction for head office expenses is 1.5% for foreign companies operating in Kuwait through a local agent, and 1% for foreign companies that are shareholders in a KSC (shareholding company) or WLL ( With Limited Liability company). The tax authorities may request that an entity reexamines any expenses deemed to be overstated and to provide documentation 1. All tax information supplied by Deloitte Touche Tohmatsu ( and Deloitte Highlight, Withholding tax (subject to tax treaties) Payments to: Interest Dividends Royalties Other income Branch remittances Resident companies None None None None NA Non-resident companies None 0%/15% None 0%/5% None supporting the expenses. The authorities have the discretion to approve, adjust or disregard the expenses. A tax exemption for up to ten years, based on a tax credit system using certain multipliers, is available under the Foreign Direct Investment Law No 8 of 2001, as amended by Law No 116 of 2013 and Law No 116 of 2014 on Public Private Partnerships. Entities set up under such laws may also take advantage of other benefits and exemptions, such as those relating to customs duties. There is no surtax or alternative minimum tax. Losses may be carried forward for three years to be offset against future taxable profits. The utilisation of carried forward losses is not permitted if: The entity ceases its activities in Kuwait (unless the cessation is mandatory); The tax return indicates that there is no revenue arising from the company s main activities; The corporate entity is liquidated; The legal status of the corporate body is changed; or The corporate body has merged with another corporate body. The carryback of losses is not permitted. Advance tax ruling availability Advance tax rulings are not available in Kuwait. Wealth tax Kuwait shareholding companies (both listed and non-listed, but excluding government companies) are required to pay 1% of net profits for religious wealth tax (zakat), or as a contribution to the state s budget. The company has an option whether to consider the 1% as zakat or the contribution to the state s budget. Capital gains tax Capital gains derived from the sale of assets are treated as normal business profits and are subject to income tax at the standard rate of 15%. Withholding tax (subject to tax treaties) The general rule is that there is no withholding tax on dividends paid to a non-resident. However, a 15% withholding tax is levied on dividends distributed by fund managers, investment custodians and corporate bodies. There are no withholding taxes on other payments; however, all government departments and companies are required to withhold final payments of no less than 5% of the total amount due to foreign entities until such entities present a tax clearance from the Director of Income Taxes confirming that they have settled all their tax liabilities. Tax treaties/tax information exchange agreements (TIEAs) Kuwait has exchange of information relationships with 83 jurisdictions through 83 double tax treaties and no TIEAs.

6 10 11 Kuwait, as part of the OECD/G20 Base Erosion and Profit Shift (BEPS) initiative, has signed a multilateral cooperation agreement, the Multilateral Competent Authority Agreement (MCAA). Under this multilateral agreement, information will be exchanged between tax administrations, giving them a single, global picture on some key indicators of economic activity within multinational enterprises (MNE). With country-by-country reporting, the tax authorities of jurisdictions where a company operates will have aggregate information annually relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. The reports will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in. The information will be collected by the MNE group s country of residence, and will be exchanged through exchange of information supported by such agreements as the MCAA. The first exchanges under the MCAA will begin in based on 2016 information. Real property tax There are no real property taxes. There is no transfer tax payable on the transfer of property. Thin capitalisation There are no thin capitalisation rules. Design work carried out outside Kuwait: 25% on the design work conducted by the head office; 20% on design work conducted by related companies; and 20% on design work conducted by unrelated companies. Consulting work carried out outside Kuwait: 30% on consulting work conducted in the head office; 25% on consulting work conducted by related companies; and 20% on consulting work conducted by unrelated companies. Stamp duty There is no stamp duty. Other business taxes All entities operating in Kuwait are required to retain 5% of the total contract value (which may be deducted from each payment made, where payment is made in instalments) from a contractor or subcontractor until the contractor/subcontractor settles its tax liabilities with the Kuwait tax authorities and obtains a certificate from the authorities. KSCs (listed and closed) must pay 1% of their profits, after the transfer of the statutory reserve and the offset of losses brought forward, to the Kuwait Foundation for the Advancement of Science, to support scientific progress. Sales taxes/vat Kuwait is part of the GCC VAT framework. However, it has postponed the implementation of a 5% VAT until There is a standard import levy of 5% on the value of imports. Some local industries are protected by higher rates of duty on competing imports. Also, exports are taxed at 5% unless they are imported items that have been exported. Financial transactions/banking services tax There are no specific financial transactions/banking services taxes in Kuwait. Payroll and social security taxes Kuwait has no payroll tax. Employers and Kuwaiti employees are required to make monthly social security contributions, based on monthly salaries. Under social security law, the employer s contribution is 11.5% and the employee s contribution is 8%. The salary ceiling for social security contributions is KWD 2,750 per month. The employee s contribution is deducted directly from wages before transferring amounts to the employee s bank account. Social security contributions are limited to Kuwaiti employees only. Transfer pricing The tax authorities deem the following profit margins on the following: Materials imported by entities operating in Kuwait: 15% on materials imported from the head office; 10% on materials imported from related companies; and 5% on materials imported from unrelated companies. Of the profits of Kuwaiti shareholding listed companies in Kuwait, 2.5% is payable to the tax department as National Labour Support Tax. Cash pooling Kuwait has no specific tax rules for cash pooling arrangements. Kuwait is part of the GCC VAT framework. However, it has postponed the implementation of a 5% VAT until 2019.

7 12 13 Banking Overview There are 11 commercial banks operating in Kuwait. These include four Islamic banks (Kuwait Finance House, Boubyan Bank, International Bank of Kuwait and Ahli United Bank) and one investment bank (the Industrial Bank of Kuwait). There are also 12 branches of foreign banks. The Kuwaiti banking sector is dominated by two banks, the National Bank of Kuwait and Kuwait Finance House. Together these two banks control approximately 56% of the banking sector s total assets. Islamic banking practices are well-established in the country; Islamic banks account for approximately 40% of the sector s assets, according to Central Bank figures. There are five banks licensed to provide Sharia-compliant products, in addition to a non-kuwaiti Islamic bank branch. In December 2016, the Central Bank issued new governance rules for Islamic banks, including external sharia audits. Major banks Bank Total assets (USD millions) 31 December 2017 National Bank of Kuwait 86,781 Kuwait Finance House 57,859 Burgan Bank 24,717 Gulf Bank 18,943 Al Ahli Bank of Kuwait 14,539 Source: April The Kuwaiti government has made some effort to divest its ownership stake in the banking sector. However, a number of local banks (Kuwait Finance House (25% state-owned), Warba Bank (76% state-owned) and Gulf Bank (18.3% state-owned)) continue to have substantial government ownership. Foreign banks, including BNP Paribas, Citibank, HSBC and Industrial & Commercial Bank of China, are present in Kuwait, but severe restrictions apply to their operations there. Foreign banks are permitted to open multiple branches (though the Central Bank of Kuwait will still approve new branches on a case-by-case basis) and to open representative offices. Technology, in addition to evolving consumer needs, is transforming Kuwait s banking sector as commercial and Islamic banks increase their investment spend on delivering digital financial services and direct banking channels.

8 14 15 Payment Payment Instruments 1 Systems Cash Cash is an important payment medium in Kuwait, particularly for low-value retail and commercial transactions. At the end of fiscal year 2015/16, currency in circulation had increased 1.6% on 2014/15 figures, to KWD 1,481.7 million. Credit transfers All credit transfers in Kuwait are automated. Credit transfers are cleared and settled via KASSIP, the national RTGS system, on a same-day basis. There is no value threshold. Credit transfers include salary, supplier and third-party payments. Contactless credit card payments, such as Al Ahli Bank s TapNGo service, are available. Each bank in Kuwait establishes its own individual clearing and settlement arrangements with the card associations. There were 2,028 ATMs and 47,615 POS terminals in Kuwait at the end of March All ATM and POS terminals are interconnected via KNET, the country s national Shared Electronic Banking Service Company. KNET also connects the country s ATM network to the ATM networks of its fellow GCC member states (via the GCCNet ATM network). Type KASSIP (Kuwait Automated Settlement System for Interparticipant Payments), Kuwait s national real-time gross settlement (RTGS) system, is operated by the Central Bank of Kuwait. KASSIP interbank settlements totalled KWD billion in 2015/16, a year-on-year increase of 13.57%. The KECCS (Kuwait Electronic Cheque Clearing System), an automated cheque clearing system, is operated by the Central Bank of Kuwait. KECCS Cheques are scanned and processed by bank tellers before being processed via the KECCS. Cheques are cleared on a same-day basis if presented before a bank s cut-off time (12.30), or within one working day if presented after the cut-off time. Final settlement takes place across the participants accounts held at the Central Bank of Kuwait via KASSIP. Direct debits Direct debits are available in Kuwait for low-value recurring payments such as utility bills. Interbank direct debits are cleared and settled via KASSIP. Funds are available to beneficiaries on a T+3 basis. Cheques The cheque remains a common cashless payment instrument for both retail and commercial payments. All KWD-denominated cheques are exchanged and cleared electronically between banks. Settlement is on a T+0 basis up to Non KWD-denominated cheques are manually cleared. In the fiscal year 2015/16, 2.63 million domestic currency cheques were processed, with a total value of KWD billion. Card payments Payment cards are a popular payment method in Kuwait. There were 4.5 million payment cards in circulation at the end of December Of these, 3.76 million were debit cards and 775,700 were credit cards. Visa and MasterCard are the principal credit card brands issued. In 2016, there were million ATM transactions processed, with a total value of KWD billion. In the same year, million POS transactions were processed, with a total value of KWD 8.3 billion. Electronic wallets Electronic money schemes are available in the form of reloadable pre-paid cards. Mobile wallet apps have been introduced by the country s larger banks. Participants KASSIP participants include the Central Bank of Kuwait and all licensed banks. All banks can participate in the KECCS. Transaction types processed KASSIP processes all KWD interbank transfers. There is no value threshold. In addition, KASSIP effects the final settlement of all other payment instruments. The KECCS processes all KWD-denominated cheque payments. Operating hours KASSIP operates from 08:00 to 14:30 AST, Sunday to Thursday. Clearing cycle details KASSIP KASSIP settles transactions in real time and with immediate finality. Payment instructions are submitted using SWIFT messages or via the central bank s private WAN network i.e. CBK Net. Settlement takes place across the participant banks correspondent accounts at the Central Bank of Kuwait. Currency centre holidays Jan, 25, 26 Feb, 13 Apr *, Jun *, 20, * Aug, 11 Sep *, 20 Nov * Jan, 25, 26 Feb, 2 Apr *, 4 6 Jun *, 9, * Aug, 1 Sep *, 9 Nov * * The date shown may vary by plus or minus one day. These dates are derived by converting from a non-gregorian calendar (e.g., Muslim or Hindu) to the Gregorian calendar. Some of these dates cannot be determined in advance with absolute accuracy, even by the governing authorities. In the case of Muslim dates in particular, the feast days are determined by the sighting of a new/full moon. Source: 1. Central Bank of Kuwait Annual Report 2015/16.

9 16 17 Cash Management Domestic Notional pooling Notional pooling is permitted between resident and non-resident companies, but regulatory restrictions on intercompany balances can make it difficult and expensive to operate. Bank regulation does not allow debit and credit balances to be set off for capital calculation purposes, making notional pooling solutions more expensive for banks. Cash concentration Cash concentration is permitted between residents and nonresident companies. Cross-border cash concentration is permitted, but not widely available. Collections Several banks in Kuwait offer cash collection and account receivables services to corporate clients. Cross-border Cross-border payments are routed via SWIFT and settled through accounts held with correspondent banks abroad. Lifting fees Banks do not distinguish between resident and non-resident accounts in terms of fee structure. Short-term investments Interest can be earned on resident and non-resident savings accounts, but is not typically offered on current accounts. Demand and time deposits are available in KWD or major foreign currencies. Interest is typically paid on the maturity date for time deposits, and on a periodic basis for other deposit accounts. Time deposits can have maturities ranging from one week to five years. Treasury bills (T-bills) are issued by the government with maturities of three to six months. (The Central Bank of Kuwait has not issued three-month T-bills since May 2012 and no sixmonth bills have been issued since 2009.) Short-term government bonds are available with maturities of three and six months, with longer maturities ranging from one to ten years. Commercial paper is offered by companies, while certificates of deposit are offered by commercial banks. Both have maturities of up to one year. Money market funds are available for short tenors up to one week. Institutions provide liquidity in KWD for up to 11 months. Repurchase agreements are available. Custody and securities settlement1 Depository Kuwait Clearing Company SAK (KCC). The KCC is the central clearing, settlement and depository entity for the Kuwaiti securities market. The KCC provides clearing, settlement, depository services to all KSE-traded securities and derivatives. The KCC provides depository services for unlisted equity securities and debt instruments. It also provides registrar and trustee services to companies and investment funds, and performs local and regional custody services for both local and foreign investors. The KCC also provides regional custody services in GCC markets through its network of sub-custodians. After the close of trading, the KSE delivers trade data electronically to the KCC, whose clearing and settlement system matches buys and sells and settles the trades on a gross basis. Investors who hold both share and cash accounts with the KCC are obligated to pay the KCC on T+3. Upon settlement, the securities and cash elements of the trades are recorded in the investors accounts at the KCC. BIS Model Model 1. Settlement cycle Generally T. T+3 for foreign investors. 1. Data as at August 2017.

10 18 Electronic Banking KNET processed more than 25 million online transactions in 2016, with a value of USD 1.6 billion. This was an annual growth rate of 35%. Electronic banking is available in Kuwait and offered by the majority of the country s banks. There is no bank-independent electronic banking standard; each bank offers its own proprietary system for corporate banking purposes. KNET provides electronic banking services to all the banks in Kuwait. In 2016, it processed more than 25 million online transactions, with a value of approximately USD 1.6 billion, an annual growth rate of 35%. KNET operates Tasdeed, an e-payment system, for the online payment of utility bills, legal fees and traffic fines. Internet and mobile banking is offered by Kuwait s leading commercial banks and is popular among both retail users and small companies. Kuwait has approximately 3.2 million internet users, a 76.6% penetration rate1. There are an estimated 8.7 million mobile phone subscribers in Kuwait, a penetration rate of 240%; smartphone penetration is in excess of 100% National ICT Indicators Report 2016, Central Agency for Information Technology. 19

11 20 21 Trade Finance Higher rates (above 5%) apply to imports of industries where domestic producers provide a minimum 40% to the Kuwaiti market. The local value-added content of goods imported determines the rate of tariff imposed. Key import partners China 13.2% USA 9.6% Saudi Arabia 7.7% Japan 6.5% Germany 5.1% India 4.2% Key export partners South Korea 14.5% China 12.1% India 12.1% Japan 10.4% USA 7.6% Pakistan 5.9% Singapore 4.3% Source: The World Factbook Washington, DC: Central Intelligence Agency, 2017 ( Imports Documents In order to import goods into Kuwait, a customs declaration, commercial invoice (including a full description of the imported goods), bill of lading, packing list and certificate of origin are required. Licences Licences are required for all imports except for fresh fruits and vegetables, wheat and flour. The importer must be at least 51% domestically owned. Taxes/tariffs and other fees Kuwait is a member of the Gulf Cooperation Council (GCC). The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. A GCC Customs Union with a common external tariff came into effect in No import tariffs apply to imports from within the GCC. As a member of the Greater Arab Free Trade Area (GAFTA), Kuwait has eliminated most trade tariffs with GAFTA s other member states. GAFTA has established a bilateral free trade agreement with the USA. A customs duty of 5% is generally applied to imports from outside the GCC. Higher rates apply to imports of industries where the domestic producers provide a minimum 40% to the Kuwaiti market. The local value-added content of the goods imported determines the rate of tariff imposed. Protective duties of 15%, 20% and 25% apply to goods imported when the local value-added content of goods of Kuwaiti origin is at least 20%, 30% or 40% respectively. Protective duties are 5% lower for imports of consumer goods. Imports competing with goods of Kuwaiti origin are subject to a maximum duty of 100%. Import duties do not apply to food items, raw materials and spare parts, or to certain types of machinery and equipment. Prohibited imports A negative list (of products that may not be imported) is in operation. It is prohibited to import certain commodities into Kuwait, in order to protect fauna and flora, and for national security and moral reasons. Importing certain weapons, certain foodstuffs, alcoholic beverages and tobacco is prohibited. Imports from Israel are prohibited. Exports Documents In order to export goods from Kuwait, a customs declaration, commercial invoice, bill of lading, packing list and certificate of origin are required. Licences In times of shortages or emergency, special licences are mandatory for exporting restricted quantities of certain agricultural products and cement. Licences are required for exporting armaments and ammunition. Taxes/tariffs and other fees No taxes are charged on exports from Kuwait. Prohibited exports A negative list (of products that may not be exported) is in operation. It is prohibited to export certain agricultural products when domestic demand outweighs supply. Exporting items to Israel is prohibited. Financing imports and exports Imports There are no financing requirements for imports. Exports There are no financing requirements for exports.

12 22 23 Useful Websites Central Bank of Kuwait Leading banks: Al Ahli Bank of Kuwait Burgan Bank Gulf Bank Kuwait Finance House National Bank of Kuwait Kuwait Financial Markets Association Ministry of Finance Kuwait Chamber of Commerce & Industry Kuwait Investment Authority Kuwait Stock Exchange HSBC website details HSBC Commercial Banking HSBC Global Banking and Market Disclaimer This document has been produced by HSBC Bank plc and members of the HSBC Group ( HSBC ), together with their third-party contributor, WWCP Limited. We make no representations, warranties or guarantees (express or implied) that the information in this document is complete, accurate or up to date. We will not be liable for any liabilities arising under or in connection with the use of, or any reliance on, this document or the information contained within it. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining your own independent professional advice. The information contained in this document has not been independently verified by HSBC. This document contains information relating to third parties. The information does not constitute any form of endorsement by these third parties of the products and/or services provided by HSBC or any form of cooperation between HSBC and the respective third parties. Under no circumstances will HSBC or the third-party contributor be liable for (i) the accuracy or sufficiency of this document or of any information, statement, assumption or projection contained in this document or any other written or oral information provided in connection with the same, or (ii) any loss or damage (whether direct, indirect, consequential or other) arising out of reliance upon this document and the information contained within it. HSBC and the third-party contributor do not undertake, and are under no obligation, to provide any additional information, to update this document, to correct any inaccuracies or to remedy any errors or omissions. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of HSBC and the third-party contributor. Any products or services to be provided by HSBC in connection with the information contained in this document shall be subject to the terms of separate legally binding documentation and nothing in this document constitutes an offer to provide any products or services.

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