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Licensing Regulations

A business license is necessary to carry on any business in Kuwait. Licenses are classified by different business activities such as general trading, contracting, financing, construction, consultancy, etc. It is necessary to have the correct license to carry on a particular activity. Some licenses are graded. In contracting for example, there are four classifications based on the size and qualifications of the contractor.

Licenses are issued only to Kuwaiti nationals or to Kuwaiti owned companies, and in some cases to GCC nationals and companies. However, GCC nationals cannot act as agents for foreign companies.

Financial Reporting and Auditing

All business enterprises are required to keep adequate financial records, and ministerial order number 206/1985 specifies books and records to be kept by a foreign body corporate subject to the provisions of the income tax decree as detailed below. The books of account of a taxpayer are invariably inspected by the Department of Income Taxes before a tax assessment is finalized.

Compliance with accounting principles and standards promulgated by the International Accounting Standards Committee (IASC) is mandatory for shareholding and limited liability companies for accounting periods starting on or after 1 January 1991. Prior to that date there was broad compliance with most international accounting standards.

For public shareholding companies, the audited balance sheet and income statement, the directors' report and the auditors' report must be submitted in Arabic within three months of the end of the financial year to the Ministry of Commerce and Industry, to the Kuwait Stock Exchange and to the general assembly of shareholders. In addition, unaudited reports must be filed with the above named authorities on a quarterly basis. The names of public company directors and auditors must be published in the official gazette. For closed shareholding companies, this is not required.

Audited financial statements of limited liability companies must be submitted to the Ministry of Commerce and Industry within 10 days of the annual general meeting. Such companies are obliged to hold a general meeting at least once a year, although in practice this requirement is often not complied with.

There are no statutory audit requirements on partnerships, joint ventures or commercial agencies. In practice, however, an audit is usually necessary for income tax purposes in cases where there is foreign participation.


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