TaxSavvyKW

KDIPA branch versus subsidiary

Should we open a KDIPA licensed branch or a 100% owned subsidiary?

The situation

KDIPA licences can cover a Kuwaiti company, a branch of a foreign company or a representative office.

The law

  • Law No. 116 of 2013 on the promotion of direct investment (KDIPA): KDIPA can licence up to 100% foreign owned entities and grant incentives including tax relief, outside the general 49% limit
  • Amiri Decree No. 3 of 1955 as amended by Law No. 2 of 2008 (Income Tax Law): 15% tax on net profits of foreign corporate bodies doing business in Kuwait; Kuwaiti and GCC owned companies taxed only on their foreign ownership share

What it means for you

A branch is part of the foreign company and is taxed at 15% on Kuwait profits. A subsidiary is separate, with its own liability, and is also taxed at 15% when foreign owned. Representative offices usually cannot earn revenue. Choose by liability, contracting and visa needs.

What to do

  1. Decide if you will earn Kuwait revenue.
  2. Compare liability exposure.
  3. Pick branch or subsidiary.
  4. Apply for the matching licence.

We can do this for youKDIPA licence for a 100% foreign owned entity or branch: KWD 3,000

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