HSBC Treasury Management Profiles 2018 -

Current section, Introduction


The strategic geographic location of Kuwait, situated between Iraq and Saudi Arabia bordering on the Persian Gulf, combined with one of the world’s largest oil reserves, has made Kuwait one of the wealthiest countries in the world per capita (USD69,669). The country has an open economy and a well-developed banking system but it is largely reliant on oil for revenue – petroleum and gas account for 95 per cent of total exports and 60 per cent of GDP. As such, the sharp decline in oil prices has corresponded to a steady decline in the country’s fortunes: the external current account recorded its first deficit in many years in 2016 (about 4.5 per cent of GDP). GDP reached 3.5 per cent in 2016, but is forecast to reach just 2.5 per cent in 2017 due to OPEC-related oil production cuts. In January 2018, Kuwait announced a USD21.6 billion budget deficit for 2018-19. The oil revenue, which comprises 89 per cent of this budget’s revenue, is projected to grow to KWD13.3 billion, an increase of 13.7 per cent from 2017/2018’s budget, while non-oil revenue, which comprises 11 per cent of this budget revenue, is projected to grow to KWD1.77 billion. Kuwait is taking measures to reduce its dependency on oil and has implemented a programme of economic diversification, known as Kuwait 2035 economic diversification. The strategy aims to increase private sector involvement in the national economy – government institutions implement around 90 per cent of development projects in Kuwait – and attract higher levels of foreign investment across a range of sectors including ICT, renewable energy, transport and tourism. The government is investing USD100 billion in the Silk City project, the construction of a new city in the north of Kuwait. Expected to be completed in 2023, the project is a key part of the government’s diversification efforts.

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Legal and regulatory

  • Foreign exchange accounts can be held by residents both domestically and abroad. Resident domestic currency (KWD) accounts cannot be held abroad, but are freely convertible into foreign currency
  • Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts are freely convertible. KWD facilities to non-residents are only permitted for government contracts
  • All transactions between residents and non-residents must be reported to the central bank on a monthly basis
  • Kuwait does not apply exchange controls
  • Non-resident investors are not permitted to hold more than a 49 per cent stake in Kuwaiti companies

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  • The taxable presence of a foreign entity is determined by whether it carries on a trade or business in Kuwait and not on whether it has a permanent establishment or place of business in Kuwait
  • Fully Kuwaiti-owned businesses in Kuwait or registered in Gulf Cooperation Council countries are not liable to income tax. The profits, including capital gains, of foreign corporate bodies from their activities in Kuwait, are subject to corporate income tax. The flat rate of tax is 15 per cent
  • There is no withholding tax on dividends paid to a non-resident. However, a 15 per cent withholding tax is levied on dividends distributed by fund managers, investment custodians and corporate bodies
  • Kuwait has postponed the implementation of a 5 per cent VAT until 2019

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Payment instruments and systems

  • Cash is an important payment medium in Kuwait, particularly for low-value retail and commercial transactions. The cheque is the dominant cashless payment instrument for both retail and commercial payments. Electronic credit transfers are for salary, supplier and pension payments. Payment cards are an increasingly popular payment method; contactless credit card payments are available
  • Kuwait operates two national payment systems: KASSIP, an RTGS system, and the KECCS, for cheque payments

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Cash management

  • Notional pooling is permitted between resident and non-resident companies, but regulatory restrictions on intercompany balances can make it difficult and expensive to operate. Cash concentration is permitted between residents and non-resident companies
  • Cash collection and account receivables services are available

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Electronic banking

  • Electronic banking is commonplace in Kuwait. There is no bank-independent electronic banking standard
  • Internet and mobile banking services are provided by all of the country’s banks for both corporate and retail purposes
  • Tasdeed, an e-payment system, facilitates the online payment of utility bills, legal fees and traffic fines

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To read the full report on Kuwait and to discover more on these and other topics, including banking and trade, please click on the Download PDF option.


  • Kuwait Central Statistics Bureau
  • International Monetary Fund
  • Organization of the Petroleum Exporting Countries (OPEC)
  • World Bank

The materials contained on this page were assembled in May 2017 (unless otherwise dated).



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