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‘Red tape prevents foreign firms to invest in Kuwait’

‘Least cooperation from top officials’

KUWAIT CITY, June 3: Some embassies are in contact with the Ministry of Finance at diplomatic level because of the lack of benefit observed by companies of their respective countries citing tax agreements signed with Kuwait, it what is seen as ‘soft criticism’, reports Al-Rai daily quoting reliable sources.

However, the sources went on to say some foreign companies have complained to the Taxation Department of the Ministry of Finance but there has not been any kind of settlement so far in the manner of dealing with them. The sources pointed to various foreign companies and one of them in HUAWEI which pays the ministry lots of taxes related to the provision of local telecom companies’ servers and technical systems. The sources indicated the Taxation Department is still holding to the reserved contracts guarantee, which is 5 percent of the value of each contract, on the pretext that it is a non-Kuwaiti company.

The sources also pointed out that among the various foreign companies is Al-Malia, a British company that is actively involved in civil aviation. Another name which popped up is DHL. The companies have long sought to convince the Taxation Department that they enjoy the benefits stipulated in the agreements signed with their countries, and in the event of the ministry deals with the tax file in the current form, the agreements signed in this regard are not useful.

The sources pointed out that the volume of direct investment to Kuwait jumped over the past two years to $2.5 billion, indicating that these figures emphasize the need to increase interest in this sector, by working to facilitate the business environment of companies, and lifting unnecessary obstacles that lead to narrowing down on these companies. The sources pointed out the tax issue with the foreign companies should be considered since it reflects the importance of these entities to the national economy and the Ministry of Finance need to understand the importance of these entities economically in a new push to stimulate activity which has fallen due to new taxes, reduced asset markets, and to maintain the global competitiveness.

The foreign investor has recently faced increasing challenges, with most domestic players needing to deal with, while foreign investments are falling in different countries. Sources pointed the main problems facing the investors is the mechanism of cooperation with the foreign investor which continues to change as senior officials take charge of various government institutions who come up with ideas of their own by taking away the advantages enjoyed by the investor to increase Kuwait’s share in investments.

The sources pointed out under pressure from the loss of credibility which is increasing on many of the procedural promises received by the foreign investor in the beginning, it has been noted that the index of confidence has begun to decline or at least did not progress for a long time.

The sources added when a foreign investor wants to open the employment file, he has to sit with the manpower agency for several sessions and even after this the agency sometimes refuses to open the file on grounds that he is not allowed to open a file for his company because he is a foreigner although the law allows foreigners to own a local company 100 percent. One example is ‘McKinsey’ which finally succeeded in opening the file after it had lost a lot of time running from pillar to post. The sources said on the ground, a foreign investor undergoes a long series of routine reviews, including the attempt to persuade officials of various government agencies that the list of conventional approvals does not apply to him.

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