With a gross domestic product of over 123 billion USD in 2015, the importance of Kuwait’s economy far surpasses its small geographical size. Kuwait has a wealthy and fairly open economy which mainly relies on the country’s immense oil resources. At 3%, Kuwait has one of the lowest unemployment rates in the world.
Expatriates with skills that are on demand in the country’s booming economy are received with open arms. Still, this applies mostly to those who will be employed in Kuwait for just a temporary period. Foreigners generally are not granted citizenship, irrespective of how long they have been a resident of Kuwait with restrictions imposed on land or property ownership.
Kuwait’s economy is dominated by the massive oil industry. Kuwait has crude oil reserves of around 104 million barrels, more than 8% of reserves worldwide. Petroleum accounts for close to half of Kuwait’s GDP and over 90% of government income. Many expatriates working in Kuwait are employed in this sector. But due to the recent drop in oil prices, Kuwait’s economy has begun to shrink. The annual GDP and exports fell from 2014 to 2015, while a budget deficit emerged for the first time in 16 years.
The manufacturing sector is also dominated by oil products and is mainly export-oriented. Recently, the fastest growing fields in the service sector have been real estate, business services, and finance. These also offer various opportunities for expats.
As Kuwait has practically no arable land, it does not have any meaningful agriculture. The state imports more than 95% of its food. The only exception is the fishing industry, as seafood is plentiful in Kuwait’s coastal waters.
All expats, with the exception of nationals of Gulf Cooperation Council (GCC) member states, have to obtain a work permit before they can take up employment in Kuwait. Work permits are only issued if the expat has a valid employment offer.
The employer then functions as a sponsor for the expatriate employee while he or she is working in Kuwait. This means the company handles all the administrative work for you, from filing the visa application to opening your bank account. Also, your sponsor is responsible for you as long as you are resident in Kuwait and liable if you violate any regulations.
Once the work permit has been granted and residency obtained, male expats can, in turn, act as a sponsor for their spouse and children to come live with them in Kuwait. If dependents also want jobs in Kuwait, they will have to obtain separate work permits.
Most of Kuwait’s extensive government spending is financed by oil revenues. Taxes, the main source of government income elsewhere, appear to be dispensable. As such, there are no personal taxes, not even for expats working in Kuwait.
The only ones liable to pay income tax are foreign companies working in Kuwait. The corporate income tax rate for foreign businesses currently is a flat 15%. Kuwaiti-owned businesses are exempted from any such taxes.
As those working in Kuwait will soon find out, there is no value-added tax, either. There have been discussions, however, about introducing it.
Kuwait has a comprehensive social security system that covers all Kuwaiti nationals working in Kuwait. It covers pensions, disability, and sickness benefits, as well as free public healthcare. The system is financed mostly by the state.
The public social security system, however, is not accessible for expats working in Kuwait. Some employers have corporate pension schemes for expatriate employees. If these are not available, it is advisable to continue paying into a state pension scheme and/or private pension plan in your home country while you are working in Kuwait.
Expatriates do have access to public medical care while residing in Kuwait. In recent years, however, there has been increasing pressure on foreign companies to provide private health insurance for expatriates working in Kuwait in order to reduce the burden on the public system, with plans to restrict expats’ service hours in public hospitals as well as building expat-only hospitals with a higher charge.
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