Kuwait is an attractive market for companies looking to expand. If you are starting or expanding a business in Kuwait there are several considerations and requirements to manage payroll and ensure compliance.
Funding options for payroll are limited in Kuwait. You must have a local in-country bank account to pay employees. Here are some of the payroll and labor considerations:
- The minimum wage is 60 KWD per month
- Standard working hours are 48 per week
- Employees are paid a gratuity, after completing a year of service. For every year of service for the first 5 years, employees receive 15 days wages, after 5 years, they receive a month of wages per year to be paid at the end of their service to the company. Learn more about End of Services Gratuity in Kuwait
- There is no payroll tax in Kuwait
- Labor laws instituted by the Ministry of Social Affairs and Labour are applicable to the private sector, including domestic and temporary workers
- Employment contracts must be written in Arabic
- All foreign workers must obtain a work and residency permit to work in Kuwait (except workers from Saudi Arabia, UAE, Qatar, Bahrain, Oman)
- In accordance with the labor laws in Kuwait, employees are entitled to payment for absence from work due to illness as follows: 15 days at full pay, 10 days at three quarter pay, 10 days at half pay, 10 days at quarter pay, and 30 days without pay
Although there is no payroll tax in Kuwait, the government uses a source taxation method, meaning that tax is imposed on the Kuwaiti-source income, and a tax liability can also arise from work not considered taxable in many other countries and jurisdictions. The source of income is considered Kuwaiti if the performance of services are in in Kuwait. Even work performed outside of Kuwait is taxable if the contract involves any activity in Kuwait. The entire revenue from transactions may be taxable if there is any significant presence of employees or short-term visits to Kuwait by representatives of a company.
To learn more about payroll-related regulations in Kuwait, read the latest article from one of our partners in the region.
Blue Marble provides global consulting services to help with labor compliance, company registration, bank account and VAT registration, statutory benefits and a wide variety of accounting and financial services to ensure compliance for your business in Kuwait.
Our cloud-based global payroll technology with aggregated monthly reporting gives you real-time access to your payroll across all countries and currencies. We provide a dedicated US-based team and direct access to in-country experts to help with payroll and labor regulations to ensure compliance in Kuwait. To learn more about payroll in Kuwait, click here