Kuwait Individual Tax Guide

Worldwide Personal Tax and Immigration Guide 2021–22

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Kuwait ey.com/globaltaxguides

Kuwait EY (Al Aiban, Al Osaimi & Partners) Mail address: P.O. Box 74 Safat 13001 Safat Kuwait

GMT +3 Street address: Baitak Tower 18th—20st Floors Ahmed Al Jaber Street Safat Kuwait

Executive and immigration contacts Ahmed Eldessouky

Nitesh Jain

Amit Arora

Roman Gusev

+974 4451-4111 Fax: +965 2245-6419 Email: ahmed.f.eldessouky@qa.ey.com +965 9098-0746 Fax: +965 2245-6419 Email: nitesh.jain@kw.ey.com +965 2295-5142 Fax: +965 2245-6419 Email: amit.arora@kw.ey.com +973 3365-1121 Email: roman.gusev@bh.ey.com

A. Income tax No income taxes are currently imposed on individuals in Kuwait.

B. Other taxes Net worth, estate and gift taxes are not imposed on individuals in Kuwait.

C. Social security For Kuwaiti employees, contributions are payable monthly by both the employer and employee under the Social Security Law. The employer’s social security contribution is 11.5%, up to a salary ceiling of KWD2,750 per month. Consequently, the maximum employer contribution is KWD316.25 per month. The employee social security contribution rate is 10.5%. For calculation purposes, the cap amounts vary. For 2.5%, the cap amount is KWD1,500 and for 8%, the cap amount is KWD2,750.

Consequently, the maximum employee’s contribution is KWD257.50.

As a result of COVID-19, the Kuwait cabinet decided as of 1 April 2020 to postpone the employers’ share in private and oil sectors (not fully owned by the state) of the monthly contributions due to the social security institutions for a period of six months.

The employer’s contribution for the period from 1 April 2020 to 30 September 2020 needs to be paid from 1 October 2020 in 24 installments. This is a temporary change.

Benefits provided, which are generous, include pensions on retirement and allowances for disability, sickness and death.

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For employees who are nationals of other Gulf Cooperation Council (GCC) member countries, contributions are payable monthly by both the employer and the employee at varying rates, which are applied to the employee’s monthly salary.

A health insurance scheme applies for all expatriate residents of Kuwait. The annual premium is payable at the time of initial appli­ cation or renewal of the expatriate’s residence permit. The premium is KWD50 for expatriates working in Kuwait, from KWD30 for their children, KWD40 for the spouse and KWD50 for children who are more than 18 years old. No other social security obligations apply to expatriates. However, expatriate employees are entitled to end-of-service benefits, which are described in End-of-service benefits.

End-of-service benefits. End-of-service benefits for expatriate employees are described below.

Employees who are paid on daily, weekly, hourly or piecework basis are entitled to 10 days’ remuneration for the first five years of service and 15 days’ remuneration for each year thereafter.

Employees who are paid on monthly basis are entitled to 15 days’ remuneration for each of the first five years of service and one month remuneration for every year thereafter. However, for employees whose work contract has an indefinite term, in case of resignation, they are entitled to half of the end-of-service benefits for a period of service not less than three years and not more than five years. If the period of service is more than 5 years but not more than 10 years, the employee is entitled to two-thirds of the benefit. For a period of service above 10 years, the employee is entitled to the entire end-of-service benefit. In case of a termination, the employee receives the end-of-service benefits even if the service period is less than three years.

Many employers choose not to follow the above rule of providing half or two-thirds of the entitlement.

D. Tax treaties Kuwait has entered into double tax treaties with approximately 70 countries. In addition, double tax treaties have been signed or initialed, but not yet ratified, with several other countries.

Note: Sections E through H below do not reflect any COVID-19 measures. As a result, readers should contact the persons listed at the beginning of this chapter for the latest information.

E. Entry visas Nationals of GCC member countries do not require visas to visit Kuwait.

Nationals of certain specified countries, which are Canada, the United States, several European countries and a few Far Eastern countries, are given entry visas on arrival at the Kuwait airport.

Nationals from other countries must arrange for entry permits before traveling to Kuwait.

The tourist permit obtained on arrival enables a visitor to stay for a maximum of 90 days in Kuwait. A fine of KWD2 per day is

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imposed for staying in the country after the expiration of the visa, and violators may also be imprisoned.

All visas in Kuwait are issued for a definite time. Visas for short visits, usually one month, are issued to business visitors and to certain family members of residents (see Section H).

Commercial visit visas are issued to employer-sponsored or business-sponsored applicants. These may be obtained by a sponsor or host in Kuwait (for example, local hotels, local agents or partners in joint ventures) from the Department of Immigration or the Min­istry of Interior before travel. To obtain a business visa, photocopies of a passport showing the personal information of an applicant (validity not less than six months from expiration date) and the applicant’s university degree, as well as an application form signed by a company, are normally required. After the visa is obtained by the sponsor, it may be collected by the visitor at the Kuwait International Air­port. In certain conditions, in some countries it is also possible to obtain a commercial visit visa through the nearest Kuwait embassy or consulate, assuming all the prerequisite documents are available.

F. Work permits and self-employment Procedures. Under Kuwait labor law, work permits are issued by

the Public Authority of Manpower. A large part of the workforce in Kuwait is made up of non-Kuwaiti Arabs, Europeans, Americans and Asians. It is expected that the employment of expatriate workers will continue for the foreseeable future, but the country is revisiting its demand for a foreign workforce.

Employers must obtain work permits from the Public Authority of Manpower for foreign, nationals, GCC nationals and Kuwaitis.

Foreign nationals, other than the GCC nationals, get residency in Kuwait based on the period of the work permit, to take up employment. All expatriates must have a Kuwaiti sponsor to obtain work permits. Expatriates meeting the prescribed salary criteria can also sponsor domestic workers subject to satisfaction of specific conditions.

Work permits are issued by the Public Authority of Manpower after the authority considers various factors, including an employer’s requirement for the labor, the availability of labor in the country and the composition of the population of the country.

Issuance of work permits is sometimes banned temporarily based on the aforementioned factors. It usually takes one month to obtain a work permit if no ban is in effect. Work permits must be activated by employers when employees arrive to take up residence in Kuwait, with a fee of KWD125, KDW195 or KDW265 for one, two or three years, respectively. The permits are valid for a maximum of three years from the date of issuance.

To obtain a work permit, an employer must submit a copy of the employee’s passport (not less than two years from the expiration date) and sign an application form. In certain cases, authenticated copies of the educational certificates of the employees must also be submitted. After the work permit is issued, it is sent by the employer to the country of origin of the foreign national for embassy attestation and for conducting the mandatory pre-arrival

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medical checkup, as well as for presentation at the point of entry into Kuwait.

As a result of the COVID-19 pandemic situation, the Kuwait government is currently allowing the transfer or conversion of a visit visa to a work permit. The employee must have a work visa to enter Kuwait. The employer arranges for the work visa. The employee is required to obtain attested copies of his or her university degree and police clearance certificate from his or her country of residence, attest them through the Kuwait embassy in the country of issuance and provide these to the employer after he or she arrives in Kuwait. After the employee enters Kuwait on a work visa, the employer will have the work visa processed into a work permit. Medical examination is required twice, in the home country of the employee and before getting the residency on the passport.

Payment of salaries through local bank accounts. The Public Authority of Manpower has announced that it will impose stiff penalties if companies fail to comply with the requirement to pay salaries to employees through local bank accounts in Kuwait by the 10th of the subsequent month.

Noncompliance with such regulations may also affect the ability of the companies to obtain or renew work permits for workers in Kuwait.

G. Residence permits On arrival in Kuwait, an employee with a work permit must apply to the Department of Immigration for a residence permit. The residence permit, which costs KWD10 per year, is usually arranged within one month after arrival in Kuwait. Residence permits can be issued for up to three years at a time, with renewal for maximum additional three-year periods available at the request of the employer. All residents in Kuwait (employees and workers in the private sector) must take government medical insurance, which costs KWD50 per year.

All residents in Kuwait must obtain identity cards (Civil ID), which must be carried at all times. The Civil ID is obtained from the Public Authority for Civil Information after a residence permit is issued. Recently, the Public Authority for Civil Information has developed an application called “My Kuwait Mobile ID” to enable access to the information of the civil ID through a mobile device.

Foreign nationals with resident status in Kuwait may travel in and out of the country without restriction if the stay outside of Kuwait does not exceed six consecutive months. Resident status is canceled if a resident stays outside Kuwait longer than six consecutive months. As a result of the COVID-19 pandemic situation, the Kuwait government is currently not enforcing this rule on a temporary basis. No exit permit is required.

Procedures for obtaining a residence permit include a medical examination, which costs KWD10 and this includes tests for HIV antibodies and for tuberculosis. The procedures also involve fingerprinting. International vaccination certificates are not required for entry into Kuwait.

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H. Family and personal considerations Family members. Expatriates with residence permits in Kuwait may obtain visit or dependent visas for their spouses and dependent children, and visit visas for certain family members.

Dependent visas may be issued for a period of up to one year and are renewable for additional periods. Family visit visas for the spouse and children are issued for a period of three months. The family visit visa for parents is issued for a period of one month.

The family visit visa for parents is granted only if the age of the parent is less than 60 years.

A person who enters Kuwait on a dependent visa may not take up employment until they complete one year under the sponsorship of family.

Family visit visa. Family visit visas may be obtained by residents of Kuwait for certain family members. These visas are valid for one month from the date of issuance and allow visitors to stay in Kuwait for a maximum period of three months. The following documents are normally required to apply for a family visit visa: • Copy of the passport of the prospective visitor • Affidavit in Arabic stating the relationship of the prospective visitor to the resident (sponsor) applying for the visa, attested to by the embassy of the sponsor’s home country and by the Min­istry of Foreign Affairs of Kuwait • Marriage certificate if the visa applicant is a spouse, attested to in the same way as the affidavit mentioned above • Copies of the work permit and Civil ID of the sponsor • Application form signed by the sponsor Dependent visa. Spouses and dependent children 18 years of age or younger may obtain family or dependent visas if the monthly salary of the employee is at least KWD500 (this amount could be higher in some cases) for private-sector employees (female children who are older than 18 years and not married may also obtain dependent visas). Persons holding dependent visas may not take up employ­ment in Kuwait until they complete one year under the sponsorship of family.

Education. Kuwait places great emphasis on providing schools at all levels for its population. Education is compulsory for children 6 to 14 years of age. The free government schools are for Kuwaiti nationals, nationals of Somalia and Yemen, and the children of the foreign nationals’ teachers who are working in the Ministry of Education; however, a wide range of private schools is available. These come under the inspection program of the Ministry of Education, but are otherwise self-governing. Private education is relatively expensive, with normal fees ranging from KWD700 per year at the kindergarten level to KWD3,800 per year for high school. British, American, French and other curricula are available.

Children on dependent visas may study in any of the private schools. Admission to Kuwait University is restricted to Kuwaitis, dependent children of Kuwait University professors and members of diplomatic missions in Kuwait. For other expatriate residents, special permission is required from the Minister of Education for admission to Kuwait University. Such permission is given in rare cases. A quota of 10 to 15 students is being given to each embassy in Kuwait.

K u wa i t 857 Driver’s permits. Holders of foreign driver’s licenses, except for

driver’s licenses issued by GCC countries and the other countries mentioned below, may not drive in Kuwait. Holders of visitors’ visas may drive with international driver’s licenses, which should be endorsed at the Traffic Department after local third-party liability insurance is obtained.

Kuwait has driver’s license reciprocity with GCC countries, most European Union (EU) countries, Australia, Canada, Japan, Korea (South) and the United States. Nationals and residents of these countries may drive in Kuwait with driver’s licenses from the countries.

Holders of resident visas must obtain Kuwait driver’s licenses.

Unless specific criteria is met, the vast majority of applicants must apply for learner’s permits and then take driving tests. In these instances, unless a person has a driver’s work visa, driver’s licenses are restricted to certain categories of professionals, including medical professionals, engineers and accountants.

To obtain a learner’s permit, an applicant must have his or her eyesight tested at one of the government hospitals. Copies of the ­person’s home country driver’s license and a certificate of salary and qualification are required. These documents must be translated into Arabic and, only if the visa designation identification is DRIVER, must be attested to by the embassy in the expatriate’s home country and by the Ministry of the Interior in Kuwait.

After a learner’s permit is obtained, a computer examination is ad­min­istered at the Traffic Department. A practical driving test is then given. Private driving schools are available to help prepare for these tests. The whole process of obtaining a driver’s license usually takes one to two months.

To obtain a driver’s license, the conditions mentioned below need to be fulfilled. Exceptions to these conditions exist in some cases and vary on a case-by-case basis. The following are the conditions: • The gross monthly salary of the applicant must be a minimum of KWD600.

• The designation mentioned on the residence permit should be in the qualifying list for a driver’s license (for example, engineers, accountants and medical professionals).

• The applicant must have a minimum stay of two years in Kuwait. For certain visa designations (for example, managers, accountants and doctors), this requirement may be waived through official approval. An attested degree certificate is required for waiving the two-year restriction on obtaining driving permits.