Payroll and HR in Kuwait

Local Information

Local Time (LIVE):9:00 AM
Local Currency:$1 = KWD 0.31
Business Language(s):Arabic and English
Tax Year Dates:1st January – 31st December

 

The Kuwait Dinar is the strongest currency in the world. The nation’s economy rests on their highest export; petroleum. Together, crude petroleum, refined petroleum, and petroleum gas make up more than 80% of Kuwait’s export revenue. It is the fifth wealthiest country in the world, with a GNI per capita of over $72,000. It’s this, and the fact that most individuals are exempt from tax, that is the reason Kuwait has become a popular country for international business expansion.

Just less than ten miles from the capital, Kuwait City, is Kuwait International Airport (KWI). This serves direct flights to 45 worldwide destinations, including the business hubs of London, New York, Paris, and Milan. Public transport across the country is in the form of taxis and buses, the latter of which is run by two state-owned bus companies and has extensive routes across the most populous areas.

Those considering opening a business branch in Kuwait need to take into account the nation’s employment legislation. It’s important to stay 100% compliant with all aspects of HR and payroll law; a requirement that demands considerable time and effort. That’s where FMP come in. We help companies all over the world to successfully expand into new countries, providing assistance and consultancy regarding a range of employment matters.

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Details correct at time of publication. You should not rely on these details without first seeking professional international advice.

Employer Must-Dos

The following is due for submission in Kuwait:

  • Tax return – within three months and 15 days from the end of the taxable period
  • Audited balance sheet and profit-and-loss account
  • List of inventory

Payroll in Kuwait

What tax considerations are there?

Personal Income Tax

Employees are not subjected to income tax in Kuwait. There is a Social Security system, for which employees must pay 10.5% of their monthly salary and employers must pay 11.5%. The purpose of the system is to provide pensions and allowances for disability, sickness, and death.

Corporate Income Tax (CIT)

Kuwait-owned business, and those owned by other Gulf Cooperation Council (GCC) countries are exempt from tax in Kuwait. Foreign-owned companies are subjected to CIT on all profits and capital gains obtained from within Kuwait. CIT is a flat rate of 15%.

Foreign companies operating business in the Saudi-Kuwaiti neutral zone will be subject to Kuwait CIT on 50% of their taxable profit.

HR in Kuwait

What are the regular working hours in Bahrain?

The working week in Kuwait is a maximum of 48 hours, and 8 hours per day over a 6 day week. Employees cannot work for more than five hours consecutively, without a one hour break – apart from in the financial, commercial, and investment sectors. Office hours are generally between 8.30am and 6pm. During Ramadan the working day should be reduced to six hours (36 hours per week) – this should legally apply to all employees, not just Muslims observing Ramadan.

For work outside, employees must not work between 11am and 5pm from 1st June to 31st August, due to excessive heat. In Islam, Friday is the day of rest. Therefore, in Kuwait, the weekend will usually be Thursday and Friday (as for schools), or Friday and Saturday. Many companies opt for the latter, so as to minimise interruption with international business.

Vacation, maternity and sickness

After nine months of service, employees are entitled to 30 days of annual leave. This must be taken within one year, and should be paid prior to the leave period. In the event of a contract termination, employees are entitled to be paid for untaken accrued leave. In addition to this, after two years of service, Muslims are entitled to another 21 days of leave to pilgrimage to Mecca if they have not done so before. There are also 13 national holidays in Kuwait, on which employees are not expected to work.

Upon presenting a medical certificate, pregnant employees can take 30 days of paid maternity leave before their expected due date, and 40 days after the birth. Women are also entitled to an additional 100 days of unpaid leave (this does not need to be consecutive) after maternity leave, as long as they present a medical certificate explaining that they cannot work.

Employees in Kuwait are entitled to sick leave as long as a medical report is supplied. This is for up to 75 days; the first 15 of these are fully paid, then 10 days at 75% pay, 10 days at 50% pay, 10 days at 25% pay, and the final 30 with no pay.

Termination

A probation period can be for no longer than 100 days, during which either party can terminate the contract without notice. It is common for people to end employment during this time to avoid the tricky termination process in Kuwait. Should either party which to terminate the contract after the probation period, they must give at least three months of notice and pay termination compensation/indemnity to the other party. The amount will depend on the employee’s length of service, and whether they are on a salary or hourly rate.

Learn More about International HR & Payroll Law

Download our guide to understand more about employment legislation across the world. We explain a wide range of topics, covering everything from termination and severance pay to maternity benefits.

Download Our Guide

FMP’s Kuwaiti Payroll and HR Solutions

Anyone considering business expansion to Kuwait City, Al Ahmadi, Hawalli, or elsewhere in Kuwait must ensure they remain compliant with all aspects of the country’s HR and payroll legislation. The team here at FMP are well-versed in all matters of international employment law, and have assisted businesses all over the world in navigating these considerations during the expansion process. Among our services are the following:

  • HR consultancy
  • Local law consultancy
  • HR and payroll auditing
  • Payroll processing
  • Emailed payslips
  • Multi-currency payslips
  • Translation
  • Employment contracts
  • Maternity benefits
  • Sick leave
  • Pensions payments
  • Vacation pay
  • Severance pay
  • Tax deductions

Achieve HR & Payroll Compliance in Kuwait with FMP

Get in touch with the experts at FMP for sound advice and assistance regarding all aspects of local employment law, when expanding your business to Kuwait.

Start your International Expansion Today