KUWAIT CRACKS DOWN ON ILLEGAL BUSINESS PRACTICES BY EXPATS WITH NEW LAW

20 January 2025

Bini Saroj

The new law introduced by Kuwait to combat illegal business practices by expatriates is known as Decree-Law No. 1 of 2025. This law aims to regulate the business environment and prevent unauthorized economic activities within the country.

Kuwait: In a decisive move to tighten its grip on illegal business activities, Kuwait has introduced Decree-Law No. 1 of 2025, targeting expatriates engaged in unauthorized commercial practices. This groundbreaking legislation, spearheaded by the Ministry of Commerce and Industry, aims to create a level playing field and uphold the integrity of the Kuwaiti business environment.

I.   Key Provisions of the New Law

Stringent Prohibition on Unauthorized Activities:

Article 1 categorically prohibits expatriates and unauthorized entities from engaging in any economic activity without obtaining the necessary licenses from the relevant Kuwaiti authorities. This includes operating under false trade names, using invalid business licenses, or misrepresenting commercial registrations to conduct illicit operations.

Empowering Judicial Oversight:

Article 3 empowers the Minister of Commerce or their designated representatives to appoint judicial police officers. These officers are vested with the authority to conduct surprise inspections, oversee commercial activities, and ensure compliance with the law. They are also authorized to initiate legal proceedings against violators, reinforcing the law's enforcement mechanisms.

Severe Penalties for Violations:

Article 4 outlines stringent penalties for those found in violation of the law. Offenders face penalties akin to those for fraud under the Penal Code, including the closure of their business and deportation. The Ministry of Commerce will publicly disclose final rulings against violators on its website, aiming to deter future infractions and promote transparency.

Obstruction Prevention Measures:

The law contains robust provisions to prevent any obstruction of the authorities' duties. This includes prohibiting the withholding of necessary information, providing false or misleading data, and hindering official investigations by withholding crucial documents.

II.  Broader Implications for Kuwait’s Business Environment

Promotion of Business Transparency: This law represents a crucial step in Kuwait's efforts to foster a transparent and equitable business landscape. By cracking down on illegal activities and imposing severe penalties, the law ensures that all businesses operate on a level playing field, thereby promoting fair competition.

Encouragement of Legitimate Investments: By creating a well-regulated and transparent business environment, Kuwait aims to attract legitimate investments. This move aligns with the country's broader economic reforms, which seek to create a conducive atmosphere for genuine business ventures.

Expatriates engaged in unauthorized business activities are now under significant scrutiny. The law’s strict provisions and severe penalties underscore the importance of obtaining the necessary licenses and adhering to legal requirements to operate within Kuwait.

In Conclusion

Kuwait’s introduction of Decree-Law No. 1 of 2025 to combat illegal business practices by expatriates marks a pivotal moment in the country’s regulatory landscape. By imposing stringent prohibitions and severe penalties, the law aims to uphold the integrity of Kuwait’s business environment. This initiative not only safeguards the national economy but also encourages legitimate investments, ensuring a regulated and competitive market.

ALKETBI TOUCH

Our team specializes in understanding the complexities of the GCC regulatory landscape, ensuring full compliance with the latest legal requirements and law innovations in order to provide tailored solutions to help expatriates and businesses establish and operate within Kuwait's and the GCC legal framework, by providing alternative. You benefit from our in-depth knowledge, strategic advice, and proactive approach, to ensure that your business adheres to all regulations and mitigates any legal risks, with an aim to safeguard your operations in such dynamic market.