Kuwait: Introduces Comprehensive Foreign Residency Law

Arab Times, 12 December 2024: A senior official from the Kuwaiti Interior Ministry has announced the introduction of a new foreign residency law designed to align with current developments and address longstanding gaps.

The previous law, in place for over six decades, had seen only minimal changes.

The new law aims to rectify shortcomings in the older legislation while ensuring justice for expatriate workers and cracking down on residency traders through stricter penalties.

The law establishes clear guidelines for the rights and obligations of both workers and employers.

Set to be implemented within six months of its publication in the Official Gazette, the new residency law comprises 36 articles across seven chapters, incorporating significant amendments to benefit both citizens and residents.

Kuwait has taken steps to comply with international standards, particularly regarding human trafficking, by introducing provisions that reflect global laws and practices.

A key feature of the new law is the extension of residency durations for certain categories.

For instance, children of Kuwaiti women are granted a 10-year residency with the option of renewal, exempting them from fees unless they acquire Kuwaiti citizenship.

Additionally, the law allows foreigners to obtain regular residency in Kuwait for up to five years and includes incentives for foreign investors, such as granting real estate owners a ten-year residency.

Investors are eligible for a 15-year residency to encourage economic activity, while the family visit visa duration has been extended to three months.

The law outlines fees related to residency permits, renewals, and all types of entry visas, subject to decisions by the ] Interior Ministry.

A committee has been formed to ensure these fees align with residents’ incomes and services provided.

Concerns were expressed over disparities in visa fees between Kuwait and other countries, highlighting that Kuwaiti citizens pay significant amounts to enter certain countries while citizens of those nations pay nothing to enter Kuwait.

Severe penalties are imposed on those who exploit residency regulations, including trading in visas or employing foreigners unlawfully.

The law prohibits employers or recruiters from misusing visas, delaying payments without justification, or employing workers for purposes other than those specified in their contracts.

Foreigners are also prohibited from working for others without the appropriate permissions.

Shelter or employment of individuals without valid residency is strictly forbidden.

Violators, including companies facilitating illegal recruitment, face harsh penalties.

Companies found guilty of human trafficking or misusing foreign labor may lose their licenses, and responsible officials could face imprisonment and fines, with penalties doubling for public employees or repeat offenders.

The law also penalises individuals who obtain work permits in exchange for money or other benefits.

The Interior Ministry retains the authority to deport foreigners, even those with valid residency permits, if they lack a legitimate source of income, violate the terms of their residency, or pose a threat to public interest, security, or morals.

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Kuwait: Proposes 15% Corporate Tax in Fiscal Reforms

Gulf Insider, 9 December 2024: Kuwait is set to implement a Corporate Income Tax as part of comprehensive fiscal reforms, with the Ministry of Finance proposing a 15 percent tax on corporate profits starting in 2025.

Outlined in the draft Business Profits Tax Law, the plan targets both local and multinational companies, exempting smaller enterprises with annual turnovers below 1.5 million Kuwaiti dinars.

The tax will apply to profits earned from 1 January 2025, with a broader rollout to additional businesses by 2027.

Initial advance tax payments are scheduled to begin in 2026.

State-owned companies will be exempt, while certain income from divided zones, including the submerged divided zone, will incur a higher tax rate of 30 percent, reduced for those who have already paid 50% of taxes to Saudi Arabia.

A supplementary tax is proposed for multinational corporations with effective tax rates below the minimum 15%, ensuring adherence to international tax standards.

Additionally, a 5% withholding tax will apply to specific payments to non-residents, such as dividends, royalties, rent, technical services, and insurance premiums, unless linked to permanent establishments in Kuwait.

Companies must register with the Tax Administration within 30 days of commencing operations.

Tax returns, along with audited financial statements, must be filed within six months of the tax year’s end.

The draft law also mandates quarterly advance tax payments based on estimated earnings, with overpayments eligible for refunds upon filing the final return.

The proposed tax system allows deductions for prior-period losses, salaries, depreciation, and contributions to the Kuwait Foundation for the Advancement of Sciences, subject to specific limits.

Businesses are required to retain financial records for ten years to fulfil reporting obligations.

Taxpayers can challenge assessments through an objection and appeal process, with disputes potentially escalated to a Tax Grievances Committee or competent courts.

Penalties for failing to meet filing or payment deadlines include a 1% charge for every 30 days of delay, applicable to missed tax declarations, withheld taxes, or delayed advance payments.

In cases where tax debts are at risk, the Tax Administration may seek court orders to seize assets, though taxpayers can avoid such measures by providing guarantees.

These reforms aim to modernise Kuwait’s fiscal framework, aligning with international tax standards while promoting transparency.

By targeting large corporations, small enterprises, and foreign entities, the proposed law seeks to balance revenue generation with equitable treatment of businesses across the economic spectrum.

Providers will be required to offer electronic payment options compatible with local banking systems, ensuring secure transactions.

The use of advanced technologies, such as distributed ledger systems and smart contracts, is permitted to enhance consumer experience, provided they are transparent and subject to oversight.

In terms of intellectual property, the law prohibits unauthorised use of protected content, holding providers accountable for violations.

Mechanisms will be established to address complaints, including fines and blocking infringing stores.

Cybersecurity provisions require service providers to implement stringent data protection measures, such as encryption and regular system updates, and to report security breaches within 72 hours.

Providers will be liable for any resulting damages.

The Ministry will oversee e-commerce activities and issue necessary regulations.

Two committees will be formed: the Violations Control Committee and the Dispute Settlement Committee, with the authority to issue warnings, impose fines, and temporarily close non-compliant stores.

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Kuwait: Moves Toward Strengthening Digital Commerce with New Law

Arab Times, 4 December 2024: The Ministry of Commerce and Industry is set to unveil a draft Digital Commerce Law aimed at creating a robust regulatory framework for the digital commerce sector in Kuwait.

This initiative marks a pivotal move towards regulating digital commerce, striking a balance between facilitating commercial activities and safeguarding consumer rights, while nurturing the growth of the digital economy.

The proposed law seeks to enhance transparency, protect consumer rights, and regulate interactions between merchants, consumers, and government bodies.
It takes into account technological advancements and anticipates future challenges.

The draft will be presented at a press conference, after which legal experts, business owners, and company representatives will have until early January to provide feedback before it is reviewed and approved by the Council of Ministers.

Key aspects of the law include definitions of terms such as e-commerce, merchant, practitioner, consumer, and sensitive data.

It applies to all commercial activities conducted electronically or digitally for the purpose of offering products and services.

The law also outlines procedures for registering businesses in commercial and practitioners’ registers, promoting transparency.

Merchants must register their online stores in the commercial register, while a separate register will be established for practitioners not listed in the commercial register.

The Digital Commerce Law also regulates various professions and specifies approved workplaces, ensuring legal clarity and compliance.

A significant focus is on consumer rights protection, requiring service providers to disclose their identity, terms and conditions, and accurate product or service information.

Consumers will have the right to withdraw from contracts within 14 days, with exceptions for non-returnable items.

The law mandates transparent mechanisms for handling consumer complaints and ensures compensation for delayed deliveries or contract breaches.

Guidelines for electronic advertising are set to regulate promotional offers and prevent misleading advertisements or unauthorised use of logos and trademarks.

Promotional offers are allowed without prior approval if clear conditions are met, but discount campaigns will need prior approval from the Ministry to ensure consumer protection.

The law addresses digital documentation and signatures, setting standards for secure document storage and requiring service providers to obtain licences for digital signatures to ensure authenticity and prevent tampering.

It establishes clear responsibilities in cases of misuse.

Providers will be required to offer electronic payment options compatible with local banking systems, ensuring secure transactions.

The use of advanced technologies, such as distributed ledger systems and smart contracts, is permitted to enhance consumer experience, provided they are transparent and subject to oversight.

In terms of intellectual property, the law prohibits unauthorised use of protected content, holding providers accountable for violations.

Mechanisms will be established to address complaints, including fines and blocking infringing stores.

Cybersecurity provisions require service providers to implement stringent data protection measures, such as encryption and regular system updates, and to report security breaches within 72 hours.

Providers will be liable for any resulting damages.

The Ministry will oversee e-commerce activities and issue necessary regulations.

Two committees will be formed: the Violations Control Committee and the Dispute Settlement Committee, with the authority to issue warnings, impose fines, and temporarily close non-compliant stores.

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Kuwait:  Leads the Way in Disability Rights Legislation and Empowerment Initiatives

Arab Times, 3 December 2024: Kuwait has emerged as a pioneer in enacting legislation to protect the rights of individuals with disabilities.

The country has established specialised schools and provides comprehensive care, acknowledging both the rights and potential of this community.

During a recent regional consultative session for the Middle East and North Africa, organised under the theme “Women and Disability,” the importance of local, regional, and international collaboration was emphasised to support individuals with disabilities.

The session has highlighted Kuwait’s welcoming environment, which has facilitated discussions among experts from various countries on disability-related issues.

The role of civil society in raising awareness and addressing barriers to implementing legal frameworks was also underscored.

Kuwait’s initiatives to integrate people with disabilities into society aim to ensure they can lead fulfilling lives and access their rights without discrimination.

The United Nations Special Rapporteur on the Rights of Persons with Disabilities commended Kuwait for its leadership on the international stage.

The session served as a platform for governments, civil society, and regional organisations to discuss challenges, share best practices, and collaborate on solutions.

It focused on raising awareness about the Convention on the Rights of Persons with Disabilities and addressing barriers to full inclusion in the MENA region.

The need for enhanced regional cooperation among governments, civil society, and international stakeholders was emphasised, along with a call for NGOs and human rights defenders to advocate for the rights of women with disabilities.

A field study presented during the session examined the impact of Kuwaiti legislation in empowering women with disabilities, highlighting the country’s commitment to gender equality and justice as enshrined in its constitution and international agreements.

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Kuwait: To End Conversion of Sick Leave to Regular Leave or Cash

Arab Times, 3 December 2024: Kuwait’s government is considering a policy shift on replacing unused sick leave with regular leave, aiming to promote fairness and reduce financial costs.

The proposed change would prevent employees from converting unused sick leave into regular (annual) leave or receiving financial compensation for unused days.

Sick leave would only be used for rest and recovery.

The potential suspension of the replacement policy is reportedly intended to curtail financial costs and encourage employees to use sick leave when necessary, rather than hoarding it for cash benefits.

Advocates argue this approach promotes better health and aligns with labour regulations, ensuring fairness for employees who genuinely need sick leave.

Critics, however, warn that stopping the replacement policy could demotivate employees who rely on it as a supplemental income source.

Some suggest that government agencies educate staff on the reasons for such a decision and explore alternative incentives to maintain morale.

While supporters emphasise that the policy fosters justice by ensuring equal treatment of all employees, detractors stress that removing this option could negatively impact employees’ income and financial stability.

They argue that sick leave, being a legitimate entitlement issued by government agencies, should remain a right that benefits employees fairly.

The debate highlights the need for a balanced approach, potentially regulating replacement policies to address both financial concerns and employee satisfaction.

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Kuwait: Introduces Strict New Residency Law

Arab Times, 25 November 2024: Kuwait’s Council of Ministers has approved a draft decree law addressing the residency of foreigners, introducing severe penalties for those involved in residency trafficking and violations.

The new decree law repeals Kuwait Emiri Decree No. 17/1959, along with any provisions that contradict the current Decree-Law (Article 35).

The new legislation comprises seven chapters and 36 articles, detailing specific provisions for the entry, residency, and regulation of foreigners in Kuwait.

The law prohibits residency trafficking through the exploitation of recruitment in exchange for money or benefits, employment violations where a foreign worker is employed for purposes other than what they were originally brought in for, unjust refusal to pay a foreigner’s wages or benefits, unauthorised work, housing or employing a foreigner without a valid residency permit, and allowing shelter for a foreigner who does not possess a valid residency permit.

Penalties for residency trafficking violations include imprisonment for three to five years and a fine ranging from 5,000 to 10,000 dinars, subject to escalation depending on the number of foreign violators involved.

Public employees who engage in residency trafficking will face a double penalty, and recidivism will lead to a further doubling of the penalty.

Legal entities found guilty of residency trafficking will face a fine between 5,000 to 10,000 dinars per violator, and their license to operate will be revoked.

The responsible individual within the entity will face penalties similar to those of an individual violator.

The law outlines conditions for the deportation of foreigners, such as having no legitimate source of income, working without a licence or approval, or for reasons of public interest, security, or morals.

A deportation order may extend to the foreigner’s family members, and the foreigner may be detained for up to 30 days during the deportation process, with extensions granted as necessary.

The Interior Ministry may waive fines for deported individuals, provided they leave the country promptly.

The employer or any individual who illegally sheltered or employed the foreigner will be responsible for the expenses related to deportation.

The law also addresses entry requirements, notification of competent authorities, residency of foreigners (including domestic workers, government and non-governmental employees), sponsor responsibilities, fees and exemptions, exit regulations for foreigners, and general provisions and penalties for residency trafficking.

It outlines procedures for obtaining visas, residency permits, and their renewals, as well as exemptions for certain groups, such as GCC nationals and diplomatic personnel.

The law also allows for settlement processes for certain violations by paying fines.

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Kuwait: Communications Ministry To Block Transactions for Debt Defaulters

Arab Times, 18 November 2024: The Kuwaiti Communications Ministry has announced its ongoing efforts to collect outstanding financial dues for services provided to subscribers.

The ministry has emphasised that it is coordinating with state institutions to restrict transactions of individuals and companies who are in arrears until their debts are fully settled.

The ministry has confirmed that the ban on transactions would remain in effect until all outstanding payments for its services have been cleared.

Over the past few days, the ministry has sent notifications to subscribers via the government application ‘Sahel’, urging them to promptly settle their financial obligations.

The ministry has also stated that an automated disconnection program will be activated in early December 2024.

This program will target both residential and commercial accounts with unpaid dues.

A second notification will be sent through the ‘Sahel’ application in the coming days, informing subscribers of the exact amounts owed.

Subscribers are urged to pay their dues promptly to ensure uninterrupted services and to avoid being included in the disconnection program or facing restrictions on government transactions.

Payments can be made through the ministry’s official website or at regional service centers using the K-Net payment service.

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