09/08/2026
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09/08/2026
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KUWAIT CITY, Aug 9: Kuwait has introduced strict penalties against commercial concealment, targeting arrangements that allow foreigners to conduct economic activities in violation of the law or the conditions of their licenses.
Under the provisions, commercial concealment covers situations in which a foreigner is allowed to engage, directly or indirectly, in an economic activity without complying with the applicable legal requirements. The scope of economic activity is broad, covering commercial, professional, industrial and service activities, ensuring that various forms of actual market activity fall within the law.
The legislation also clearly defines who is considered a “foreigner,” excluding individuals who are legally treated as Kuwaitis under applicable laws or international agreements. This provision reflects Kuwait’s international obligations and the principle of reciprocity.
The law establishes that no natural or legal person may conduct an economic activity in Kuwait without first obtaining the licenses and approvals required under applicable laws and regulations. It specifically prohibits foreigners from engaging in economic activities in violation of the law, whether directly, indirectly or through any other means.
Authorities will also target arrangements in which a foreigner uses another person as a front to conduct business or attempts to disguise an illegal activity as a legitimate one.
Jail and fines up to KD 100,000
The penalties for violating the main prohibition are severe. Anyone found guilty of violating Article 2 may face imprisonment for between one and three years, along with a fine ranging from KD 10,000 to KD 100,000, or an amount equivalent to the total profits obtained from the illegal activity, whichever is greater.
The court may impose either both penalties or one of them, while the fines can be multiplied according to the number of people involved in the violations or the number of activities carried out in breach of the law.
A separate violation covered by Article 11 carries a penalty of up to six months in prison and a fine of up to KD 10,000, or either penalty. Here too, the fines may be multiplied based on the number of violators or violating activities.
Managers and companies can also be held accountable
The legislation extends liability beyond individuals directly involved in the offense. The person responsible for the actual management of a legal entity may be punished if it is established that they knew about the violation or that the offense occurred because they failed to perform duties required as part of their management responsibilities.
The provision is intended to ensure that individuals who actually direct, supervise or control an activity cannot avoid responsibility simply because the business operates through a legally registered company.
Legal entities can also face joint liability with their employees when an offense is committed in the name of the company or on its behalf. This reinforces the principle of corporate accountability and prevents companies from being used as a legal cover for commercial concealment or other illegal activities.
Confiscation and closure
The consequences can extend beyond imprisonment and financial penalties. In cases where a person is convicted of one of the crimes stipulated under the decree-law, the court must order the confiscation of funds and profits obtained through commercial concealment.
The law also imposes tougher consequences on repeat offenders. If a person commits the crime of commercial concealment again within five years from the date the final conviction becomes effective, the prescribed penalty is doubled.
The provisions therefore combine criminal penalties, financial sanctions and confiscation measures to discourage the use of front arrangements and illegal business structures.
Reconciliation allowed under strict conditions
The law also introduces a reconciliation system that provides a legal mechanism for settling certain commercial concealment violations under specific conditions.
The competent minister, or a person authorized by the minister, may approve reconciliation before criminal proceedings are initiated or while a case is before the competent court, provided a final judgment has not yet been issued.
To qualify, the offender must pay an amount not less than half of the maximum prescribed fine, rectify the violation and correct their legal status. Once the reconciliation requirements are fulfilled, the criminal case is terminated.
However, reconciliation does not prevent the authorities from taking administrative deportation measures when considered necessary in the national interest. Reconciliation is also not available to repeat offenders.
Whistleblowers could receive financial rewards
The law also encourages the reporting of commercial concealment. Under Article 9, individuals who help authorities discover and report a commercial concealment crime, provided they are not among the perpetrators, may qualify for a financial reward.
The reward will be determined by a decision of the competent minister and may reach up to 10 percent of the total value of fines collected.
To qualify, the whistleblower must provide serious evidence that contributes to establishing the crime, and the case must ultimately result in a final conviction.
If several people contribute to reporting and uncovering the same offense, the reward will be divided equally among them.
The new framework therefore combines strict criminal penalties, corporate accountability, confiscation, tougher punishment for repeat offenders, conditional reconciliation and incentives for whistleblowers as Kuwait moves to curb commercial concealment and ensure that economic activities are conducted in accordance with the law.
by John C Fernandes
Online Media Manager - Arab Times