Incentives Granted to Foreign Investors Under PDIK Law
As we have mentioned during our last article, the Council of Ministers issued its decision no. (75) of 2015 Regarding the List of Excluded Direct Investments from the Provisions of Law No. (116) of 2013 regarding the Promotion of Direct Investment in the State of Kuwait, this decision exclusively excluded the application of PDIK Law in respect of certain activities which enhance the transparency and reduced any assumptions about the restricted business in Kuwait, we will discuss in this article the incentives and guarantees granted to the Investors according to PDIK Law.
During the application process, KDIPA will evaluate the application submitted by the Investor to determine its eligibility for the incentives – partially or entirely- under the PDIK Law, the main granted incentives were mentioned in Article 27 of PDIK Law which are:-
1. Exemption from income tax or any other taxes for a period not exceeding ten years from the date of the actual commencement of operations of the licensed investment entity.
2. Exemption of any expansion of an investment entity, licensed in accordance with the provisions of PDIK Law, from the taxes set forth in the preceding paragraph, for a period of no less than the duration of the exemption granted to the original investment entity as of the date of commencement of production or actual operation of the expansion.
3. without prejudice to the provisions of Law No. (10) of 2003 promulgating the Unified Customs Code for the Gulf Cooperation Council Countries, the following shall be wholly or partially exempted from taxes, customs duties or any other fees that may be payable on imports required for the purposes of direct investment:
a. Machinery, tools and equipment and means of transport and other technological devices.
b. Spare parts and necessary maintenance supplies for what has been described in the previous subsection.
c. Merchandise, raw materials, partially manufactured goods, wrapping materials and packaging.
But the Investor is prohibited, for a period of five years as of the date notifying him of exemptions from the duties described in this article, from disposing in any manner over the goods described in this clause, including by way of sale, swap or assignment. During the same period, the Investor may not utilize the goods in any other manner than for the purpose for which they were imported, except in accordance with the principles and rules decided by the board of KDIPA in this regard, and shall pay the taxes and fees that would have been due for the importation at the time of disposal.
4. The use of land and real estate allocated to the Authority or that is subject to its supervision or management, in accordance with the principles and rules established by in this regard.
5. The employment of foreign labor required for the investment, in accordance with the principles and restrictions established by decision of the Council of Ministers in respect of the board of KDIPA the minimum proportion of national employment that must be provided.
6. The Council of Ministers may decide to grant some cases and groups certain advantages and exemptions, which are not mentioned above.
Although that the above incentives may vary from Investor to another but the PDIK Law stipulated upon the application criteria to grant the said incentives which will be discussed next week.