(Last updated: 4 Aug 2011)

Business etiquette

Business practices:

• It is important to understand that business relationships in Kuwait are more influenced by local customs and standards of behaviour than they are in Australia. Face-to-face meetings are very important and building personal relationships play a large role in achieving success.
• Kuwaiti's will greet each other with kisses on the face or on the forehead and walk hand-in-hand. Westerners will be greeted with a handshake. Kuwaiti's do not like to be slapped on the back or neck.
• Kuwaitis are aware of seniority. Ensure that an older or more senior person walks through the door first. Similarly, if walking together, the guest or senior person should be on the right of the group as a mark of respect.
• It is considered offensive to sit with the soles of your shoes or feet facing the other members of your group.
• It is not as usual in Arab countries to hear ‘please’ and ‘thank you’ or to be served with a smile. Arabs reserve such pleasantries for people they really know and like. You often find that your use of Arabic greetings will lead to a more pleasant atmosphere. It will also help if you speak distinctly and slowly.
• When entertaining visitors, the host should never terminate a conversation abruptly or seem to be dismissing a guest, no matter how busy they may be.
• Care should be taken not to express admiration for something owned by your host, for you may be embarrassed by having the object offered to you then and there as a gift. This is an ancient custom, still preserved in traditional areas.
• Kuwaiti men are usually addressed by their first given name.
• It is advisable for female business visitors to be accompanied by a male colleague on the first business meeting in Kuwait. For follow up meetings this is not necessary. An abaya is not required to be worn by expatriate women.

Business discussions:

• Arranging appointments with government bodies can be a lengthy process in Kuwait and advanced notification of a minimum of six weeks should be given. If you are planning to visit the region, please discuss dates and travel arrangements with Austrade Riyadh first to ensure that your trip will be a successful and rewarding one. There can be no guarantee of an appointment being confirmed, however, with the correct procedures followed and with plenty of lead time the likelihood of the appointment being confirmed is increased.
• ‘Small talk’ is vital for the establishment of trust and must not be hurried or dispensed with. Impatience is unforgivable, a sign of bad manners or a lack of self-confidence. In social or opening business conversations, there is usually small talk, often centring on the health and wellbeing of the other person, but never about his wife or female relatives.
• Hospitality requires that a Kuwaiti offer you tea or coffee. Coffee is offered to guests in order of their rank. It is customary to drink more than one cup of coffee or tea but not any more than your host or others present. To decline a further serving, you shake the cup when handing it back to the server. If you are the host, you should offer coffee or tea.
• It is customary to work gradually to business, though some businessmen and officials are very time conscious and appreciate punctuality and brevity. In the less dynamic areas of business and government, people may be very relaxed about their own observance of time and punctuality - this should not be misinterpreted as discourtesy or a lack of interest. Punctuality will be expected, though it may not be encountered.
• There is an Arab custom of having a number of people in an office all discussing various matters at once. When invited into an office where businessmen are sitting, you start an introductory conversation after which your host may break off conversation with you and deal with one of his other visitors before returning to you. It is not unusual for a Kuwaiti businessman or official to receive several visitors at once. Others may walk into the room mid-conversation. The threads of these separate conversations can be kept going at once and you may get several cups of tea and coffee between the parts of your conversation with the person you are calling on.

Functions etiquette:

• It can generally be assumed that only males will attend the function. Women frequently have separate functions.
• It is unlikely that a visitor will be invited to an Arab’s house unless the host is very Western-oriented or a strong friendship has developed. If you invite an Arab to dine with you, do not include his wife in the invitation unless you have prior indication that she may accept.
• If the group is large and the guests are important, traditionally, the feast is laid out on mats or carpets spread on the ground or floor and the guests assemble around it. Conventional tables and chairs are often used in the cities and the customary food is frequently supplemented with European style dishes. Knives, forks and spoons may be used but at traditional meals the guests may tear off pieces of meat and dip into the rice and other dishes with their right hands. When the eating is over, water and soap may be offered for washing hands. Leave as soon as this is done, as coffee is not served after meals.

Please also note: Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

The General Administration of Customs collects four per cent general tariff on most imports. The cost, insurance and freight (CIF) incurs a flat rate on imported goods.

Most imports are subject to the general rate of four per cent, assessed on the CIF value or on C&F value (Incoterms 2000) plus one per cent of the value of the goods. On all other items wherein a similar product is manufactured in Kuwait,the duty will range from 15 per cent to 25 per cent.

Goods exempt from duty include:

• most foodstuffs
• raw gypsum
• unworked mosaic stones
• most live animals
• books
• newspapers

Protective tariffs also exist on ‘infant industries’ where imports compete with locally manufactured goods and can be up to 25 per cent. Items subject to the higher duty include:

• ACR batteries
• paint
• certain aluminium doors and windows
• roofing felt
• steel furniture
• wooden household furniture

The Kuwaiti Government may also raise tariffs in order to raise revenue and ‘harmonise upward’ with the tariffs in other GCC countries.

There are no customs duties on food, agriculture items or essential consumer goods. Some machinery, most spare parts and all raw materials are also exempt from customs duty.

Transit duty is two per cent ad valorem.

Customs authority contact details:

Director General of Customs
PO Box 16 Safat
13001 Safat
Tel: +96 5 484 5419
Fax: +96 5 484 5780

Non-tariff barriers

Import restrictions

Import licences are required for most private imports and are issued by the Ministry of Commerce and Industry. Most fresh foodstuffs are exempted.

Importers must be Kuwaiti nationals, registered with the Kuwait Chamber of Commerce, and possessors of a general import licence.

Customs clearance is prompt and takes about three hours for perishable imports arriving via air, land or sea. The importer must present the import licence and quality test certificate. An importer does not need an import licence for each product for each shipment. However, an importer needs to obtain an annual import licence from the Ministry of Commerce and Industry.

Imports that do not have the established standards may be allowed a three-month temporary entry against storage fees. Goods coming in for transhipment may be allowed temporary entry.

The following products are not permitted into Kuwait:

• Pork and pork products
• Alcoholic beverages and products containing alcoholic beverages
• Gambling machines
• Materials considered pornographic
• Kuwait also prohibits imports from Israel

Product certification, labelling and packaging

Labelling

Kuwait labelling standards have been adopted as the standard for the Gulf Co-operation Council. All goods imported into Kuwait must be clearly labelled with the country of origin. All foodstuffs should carry an Arabic language label.

Outer containers must show a distinguishing mark which consists of a triangle containing:

• The package number
• The cable address of the importing merchant or importing agent (whichever held the relevant import licence)
• The country of origin

The mark of the importing merchant or that of the importing agent may be added outside the triangle if desired. Goods to which these rules cannot be applied (eg. iron, timber, pipes, etc.) are exempted.

Outer packaging must contain a description of the product in Arabic (other languages, used in addition, such as English, are also permitted).

Basic information must be provided on the packing list submitted to customs:

• Invoice number
• Marks and number
• Gross weight of total cargo
• Description of the kind and type of contents
• Statistical code of the goods (available in Harmonic System code)
• Total package of each type
• Packing type of each type
• Total units and gross/net weight of each type
• Value (FOB or C&F) of each type

In preparing the packing list, the following points should be noted:

• The packing used for each kind of goods must be described in the relevant section of the packing list.
• Description/information about the cargo should be clear and informative and describe the nature of the goods.

If the above information is not provided to customs, the transaction will be described as lacking documents. An undertaking letter with a deposit would be needed, with the exception of break bulk and cargo of the same kind. If the invoice contains all the information required on the packing list, a packing list will not be required.

The country of origin must be shown on each item of the imported goods in such a manner that it cannot be removed or altered. This information must conform with details contained in all other documents. Goods that cannot be labelled individually, eg. fresh fruits, may have a sticker attached or their packaging labelled instead.

If an imported product consists of components from more than one country, the percentage from each country should be indicated.

Information must form an integral part of the label (stick-on labels are not acceptable).

Food labelling must include the following:

• the name of the food
• the contents, ie. ingredients in descending order of either weight or volume
• the date of manufacture/production
• the expiry date
• net and gross weights
• country of origin

Strict labelling laws concerning some pre-packed foods have been introduced. Exporters should confirm all requirements before exporting.

Specific labelling regarding health warnings must be indicated on cigarette and cigar packets.

Packaging

Packing should be secure and guard against extreme heat in summer, humidity in winter and possible storage in the open.

Special certificates

Animals and animal products must be accompanied by health certificates issued by the competent authorities in the country of origin.

Consignments of meat and meat products must be accompanied by an original slaughter certificate issued by the Australian Federation of Islamic Councils.

When registering food products, a certificate stating that the food does not contain any form of cyclamate compound is required by the Ministry of Public Health.

Documentary requirements

Commercial invoice

One original and two copies are required.

A minimum of one original and three copies are required and must indicate:

• Country of origin
• Marks and numbers
• Full description of goods
• Net and gross weights in metric quantities
• Unit and total value
• Name of transporting vessel
• Names and addresses of manufacturer, shipper and consignee

Declaration of origin on invoice must be signed and state: 'We hereby certify that the goods enumerated in this invoice are not of Israeli origin nor do they contain Israeli materials and are not to be exported from Israel.'

All discounts and rebates must be stated.

Invoices should be certified by an authorised chamber of commerce and legalised by an Arab consulate or embassy.

Legalisation

Original commercial invoice, original certificate of origin and original packing list must be legalised by the Kuwait Embassy/Consulate and should be attested by the local chamber of commerce. If there is no Kuwait Embassy/Consulate, legalisation can be done by any Gulf Country embassy, if available, or any Arab embassy.

All original shipping documents must be sent along with the shipment. Immediately after stuffing the container, the origin station should be advised and given details of container number, number of packages, bill of lading etc. Other details regarding shipper, consignee, copies of the AOS bill of lading manifest should reach the agent within seven working days prior to the vessel's arrival at the Kuwaiti port of entry.

Pro-forma invoices

Pro-forma invoices may be requested to facilitate the establishment of letter of credit.

Certificate of origin

A certificate of origin is required and must be certified by an approved authority (see 'Guidelines', section 2.3) prior to consular legalisation. A minimum of three copies is required. It must also indicate:

• Country of origin of manufacturer or processor
• Net and gross weights
• The recorded trademark mentioned in the manifest
• The value
• The type of packing
• The transportation medium

The following declaration must be made and endorsed by an official of the exporting firm: 'We hereby certify that the goods enumerated in the invoice are not of Israeli origin.'

Bill of lading/airway bill

No special requirements, although the usual details should be indicated in accordance with the manifest. It must also indicate whether the freight is pre-paid or payable. Two originals are required.

Packing list

Required with Harmonic code and gross/net weight. Note: For each shipment (no matter what value or weight) an original certificate of origin is required. This must be legalised by the Kuwait Embassy/Consulate and attested by the Chamber of Commerce as an original.

Public health requirements

Detailed quarantine and health regulations apply and exporters should check before shipment.

Cattle and sheep need to be vaccinated against various diseases and will require certification issued by the approved authority in the country of origin. This is usually the Australian Quarantine and Inspection Service (AQIS).

Animal products require a health certificate issued by the approved authority in the country of origin.

Imports of meat and meat products for human consumption must be accompanied by a certificate stating that the animals have been slaughtered in accordance with Islamic Sharia rites (see also 'Special certificates').

Foods must be sample-tested and approved by the Kuwait Ministry of Health before importers can take delivery.

The use of cyclamates in foods or beverages is prohibited and a certificate stating that no form of cyclamate compound is contained in an imported food product must be provided, in triplicate, to the Ministry of Public Health on application for product approval.

The proportion of and reason for using any other artificial sweeteners in preserved foods must be stated on the outside of their containers.

Pharmaceutical products must be registered with the Kuwait Ministry of Health. This generally requires the presentation of a certificate of free sale issued by the approved authority in the country of origin (proving that the drug is allowed to circulate in that country). In Australia the issuing body is generally either the Therapeutic Goods Administration or the National Registration Authority for Agricultural and Veterinary Chemicals.

Insurance

Usually arranged by importer.

Weights and measures

The metric system.

Methods of quoting and payment

Quotations can be C&F US dollar, Pound Sterling, French Francs or Swiss Francs.

Some importers may request CIF quotations.

Payment is usually by irrevocable letter of credit.

Taxation

The Tax Decree of 1955 governs taxation in Kuwait along with various tax treaties with a number of foreign nations. Directives issued by the Director of Income Taxes supplement these decrees.

Payment, filing and assessment procedures are covered by tax administration. A taxpayer may request in writing to have a year-end other than the 31st December. An 18-month accounting period is allowed initially, thereafter 12-month accounting period is required.

Where a foreign company has a minority shareholders interest in a locally registered company, tax is levied on the foreign company’s income (whether distributed or not) plus any amounts receivable for interest, royalties, technical services or management fees.

Kuwait tax laws do not distinguish between resident companies, non-resident companies and branches of foreign companies.

Although a partnership is an association of individuals who are not subject to taxation in Kuwait, the Director of Income Taxes treats a foreign partnership as if it were a body corporate and levies taxes on its operations in Kuwait in the normal way.

A joint venture or consortium has no legal status in Kuwait and the tax department normally raises assessments on the consortium involving joint performance of the contract, that is, a combined tax declaration for the total earnings from the contract. Each partner's share of taxable profit may then be taxed individually. Where a consortium involves separate performance by the partners, each partner needs to account for their share of revenue in a separate tax declaration.

There are no withholding taxes in Kuwait, but there are on payments due to foreign companies until such time as they satisfy their Kuwait customer that they have dealt with their Kuwaiti tax obligations by the presentation of a tax clearance issued by the Director of Income Taxes.

Businesses in Kuwait are also required to inform the Director of Income Taxes of the companies with whom they are doing business as contractors, subcontractors or in any other form. Information to be provided should include the name and address of the company together with a photocopy of the contract. The final payment should not be less than five per cent of the total contract value. When inspecting the tax declaration filed with the Director of Income Taxes, the Ministry of Finance will disallow all payments made to sub-contractors that have not been reported.

Kuwait has signed double taxation treaties with Cyprus, France, Germany and Italy. Treaties with Belgium and China await ratification. Treaties are also in final draft form or are being negotiated with Australia, Austria, Canada, Finland, Hungary, India, Malaysia, Singapore, Switzerland, Turkey and USA. Because Kuwait does not withhold tax on dividends, interest or royalties, these treaties do not provide special withholding rates for payments from Kuwait to residents of these countries.

There are also double tax taxation agreements with certain countries relating solely to international air and/or sea transport.

Tax exemption for approved projects

Austrade works in conjunction with the Australian Taxation Office ('ATO') to administer the income tax exemption available under section 23AF of the Income Tax Assessment Act 1936 ('Tax Act').

Section 23AF should assist the international competitiveness of Australian companies and governmental organisations competing to win international tenders. Further information is available.