Doing Business 2019 Kuwait Economy Profile Kuwait Page 1 Doing Business 2019 Kuwait Economy Profile of Kuwait Doing Business 2019 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 Kuwait About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Kuwait Ease of Doing Business in DB 2019 Rank Region Middle East & North Africa 190 1 Kuwait Income Category High income 97 DB 2019 Ease of doing business score Population 4,136,528 0 100 City Covered Kuwait City 62.20 DB 2019 Ease of Doing Business Score 0 100 69.85: Bahrain (Rank: 62) 67.19: Oman (Rank: 78) 62.20: Kuwait (Rank: 97) 60.98: Jordan (Rank: 104) 58.30: Regional Average (Middle East & North Africa) 44.72: Iraq (Rank: 171) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Kuwait 1 7 28 55 69 72 77 82 Rank 95 109 115 133 131 134 136 159 163 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - Kuwait 100 92.48 81.40 80 71.78 67.54 62.35 58.33 59.58 Score 60 54.24 39.29 40 35.00 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 Kuwait Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a business or to leave the home to register the also collected for the second largest business city. company - The entire office space is approximately 929 square meters (10,000 square feet). - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 procedures cannot start on the same day) - Does not qualify for investment incentives or any special benefits. - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final document is received The owners: • No prior contact with officials - Have reached the legal age of majority. If there is no legal age of majority, they are assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 Kuwait Starting a Business - Kuwait Standardized Company Legal form Limited Liability company (WLL) Paid-in minimum capital requirement KWD 0 City Covered Kuwait City Indicator Kuwait Middle East & OECD high Best Regulatory North Africa income Performance Procedure – Men (number) 7 7.2 4.9 1 (New Zealand) Time – Men (days) 35 20.5 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 2.0 22.6 3.1 0.0 (Slovenia) Procedure – Women (number) 8 7.9 4.9 1 (New Zealand) Time – Women (days) 36 21.2 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 2.0 22.6 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 8.1 8.6 0.0 (117 Economies) Figure – Starting a Business in Kuwait and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 92.89: Oman (Rank: 37) 89.57: Bahrain (Rank: 66) 84.43: Jordan (Rank: 106) 82.00: Regional Average (Middle East & North Africa) 81.40: Kuwait (Rank: 133) 76.55: Iraq (Rank: 155) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2019 Kuwait Figure – Starting a Business in Kuwait – Procedure, Time and Cost Time (days) Cost (% of income per capita) 0.9 35 0.8 Cost (% of income per capita) 30 0.7 25 0.6 Time (days) 20 0.5 0.4 15 0.3 10 0.2 5 0.1 0 0 1 2 3 4 5 6 *7 *8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2019 Kuwait Details – Starting a Business in Kuwait – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 APPLIES TO WOMEN ONLY: Obtain permission to work outside the marital 1 day no charge home Agency : Home As per Article 89 of the Personal Status Law, 1984, if a woman fails to obtain the permission/support of her husband to work outside the marital home (for example, for entrepreneurial ventures) it is possible that she may suffer consequences under the law. For example, if the husband consider that the work of his wife is against the well-being of the family, she could be considered disloyal (Nashez) and may not be entitled to financial alimony 2 Register at the Kuwait Business Center (KBC) 1day + 10 days wait no charge Agency : Department of Companies to get the To register, the entrepreneur must submit online a completed standard application form to confirmation email the Kuwait Busines Center (KBC) and submit a copy of the memorandum of association. and go in person to KBC The completed application must include the names of the founding partners and their respective shares; the capital, scope and objective of the company; and the name of the manager. The applicant submits the paperwork online (www.kbc.gov.kw/) The entrepreneur can select up to 5 potential company names during the online application. Once the application is approved, it is stamped and signed by the Department of Companies, and allocated a reference number. The MOCI electronically sends information for further checking to the Ministry of the Interior, Kuwait Fire Service Directorate and the Municipality (Baladia). 3 Sign and notarize the memorandum of association before the public notary 1 day KWD 2 for the first of the Ministry of Justice page of the Agency : Notary - Ministry of Justice Memorandum and The entrepreneur submits the draft memorandum of association along with Department of KWD 1 for every Companies' letter and the bank capital deposit certificate to the Notary Public Department subsequent page at the Ministry of Justice. The officer verifies that the required documents are complete and schedules an appointment for signing before the notary public at the Company Formation Department of the Ministry of Justice, during which the memorandum of association is signed by the founding partners and notarized on the set date in 3 originals: one for the company, one for the Ministry of Justice, and one to be field with the Ministry of Commerce and Industry. 4 Obtain the commercial license from the Department of Companies 1-2 days KWD 80 Agency : Department of Companies Once the commercial registration certificate is issued, the entrepreneur obtains the commercial license from the Department of Companies. The entrepreneur can apply online: https://mociweb01.csc.gov.kw/TradeWebsite_KBC/CompanyLicnReq.aspx 5 Receive approval of the company premises by the Municipality 5 days on average no charge Agency : Municipality The entrepreneur needs to go in person to apply for the municipality approval of the company's premises. The entrepreneur submit a copy of the MOCI trading license confirmation email and originals of the lease agreement. The municipality issues a certificate of no objection in the name of the company, allowing the use of the indicated premises as the company location. This process usually takes 5 to 14 days. 6 Register with Public Authority for Civil Information (PACI) 15 days KWD 1 Agency : Public Authority for Civil Information (PACI) (simultaneous with The company must register with the Public Authority for Civil Information (PACI) in procedures 7 and 8) order to obtain a civil number, which is required in dealing with other governmental bodies. 7 Register at the Ministry of Labor and Social Affairs 15 days KWD 25 Agency : Ministry of Social Affairs and Manpower (simultaneous with The Ministry of Labor may inspect the premises to determine whether the size of the procedures 6 and 8) company premises and its business scope are commensurate with the number of employees declared at the Ministry. 8 Register with the Kuwait Chamber of Commerce and Industry 1 day (simultaneous KWD 82 for Agency : Chamber of Commerce with procedures 6 registration and KWD The company must apply for membership at the Chamber of Commerce and Industry by and 7) 55 for annual renewal submitting copies of its commercial license and memorandum of association, and filling out a specimen signature form signed by the company's authorized signatories. The membership is a pre-requisite to dealing with other government authorities, banks and participation in public tenders. Applies to women only. Takes place simultaneously with previous procedure. Page 8 Doing Business 2019 Kuwait Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any • Registering and selling the warehouse after its other employees who are technical or licensed experts, such as geological or completion topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering information - Will be used for general storage activities, such as storage of books or stationery. - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted Cost required to complete each procedure (% of as procedures. income per capita) - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is • Quality control before construction (0-1) no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 9 Doing Business 2019 Kuwait Dealing with Construction Permits - Kuwait Standardized Warehouse Estimated value of warehouse KWD 509,924.10 City Covered Kuwait City Indicator Kuwait Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 23 16.6 12.7 None in 2017/18 Time (days) 231 137.4 153.1 None in 2017/18 Cost (% of warehouse value) 1.2 4.7 1.5 None in 2017/18 Building quality control index (0-15) 13.0 12.1 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Kuwait and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 73.40: Bahrain (Rank: 57) 72.05: Oman (Rank: 66) 67.64: Iraq (Rank: 103) 62.35: Kuwait (Rank: 131) 60.47: Jordan (Rank: 139) 59.17: Regional Average (Middle East & North Africa) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Kuwait – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.9 0.8 200 Cost (% of warehouse value) 0.7 150 0.6 Time (days) 0.5 100 0.4 0.3 50 0.2 0.1 0 0 1 *2 3 *4 5 6 *7 *8 9 * 10 11 * 12 13 14 15 16 17 18 19 * 20 * 21 * 22 23 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 10 Doing Business 2019 Kuwait Figure – Dealing with Construction Permits in Kuwait and comparator economies – Measure of Quality 15 13.0 12.0 12.1 11.0 11.0 Index score 10 5.5 5 0 Kuwait Bahrain Iraq Jordan Oman Middle East & North Africa Details – Dealing with Construction Permits in Kuwait – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Conduct soil test with private laboratory 7 days KWD 200 Agency : Private Laboratory BuildCo must conduct a soil test with a private laboratory that is certified by the Municipality of Kuwait. The soil test report must be submitted to the Municipality as part of the building permit application. 2 Obtain a topographical survey of the land 3 days KWD 75 Agency : Private accredited firms or the Ministry of Public Works Topographic Surveys are used to identify and map the contours of the land plot. Its purpose is to serve as a base map for the design of a building. It also shows the boundary lines and is used by designers to accurately show the required setbacks. It is used for the site plan, which is a mandatory requirement for all construction. 3 Submit drawings and receive certificate from the Public Authority for 30 days no charge Industry (PAI) Agency : Public Authority for Industry (PAI) Since the warehouse will be used for storage, BuildCo must submit the project drawings to the Public Authority for Industry (PAI). PAI will then review the drawings and issue an approval certificate. Submission of drawings to PAI is required for any construction that will be used for storage or industrial activities. A copy of the government’s lease agreement is needed. 4 Hire an external firm/engineer to supervise construction 1 day KWD 3,902 Agency : Private Firm 5 Obtain lot plan with site map from the Municipal Authority 7 days KWD 5 Agency : Municipality of Kuwait BuildCo must request a lot plan physically at the municipality. 6 Obtain approval of plans from Kuwait Fire Services Directorate 60 days KWD 200 Agency : Kuwait Fire Services Directorate Documents to be submitted include: - Architectural design - Ventilation design - Elevators design - Hazard sector plans - Alarm system plans 7 Request electricity and water plans approval from Ministry of Electricity 1 day no charge and Water Agency : Ministry of Electricity and Water According to No. 30/2012 issued by Kuwait Municipality on August 2012, the building permit will not be granted unless the Ministry of Electricity and Water (MEW) gives its approval on the electric supply. A site inspection must be conducted before the approval can be issued. MEW is understaffed and therefore, it can take anywhere from 1 week to 1 month for the site inspection to happen. Approval of the plans can take 1-2 months after the inspection takes place. 8 Request sewage plans approval (sanitary certificate) from Ministry of 1 day no charge Public Works Agency : Ministry of Public Works BuildCo must request approval of sewage plans from the Ministry of Public Works. Upon approval, the Ministry will issue a sanitary certificate. A site inspection must be conducted before the certificate is issued. 9 Receive electricity and water inspection from Ministry of Electricity and 1 day no charge Water Agency : Ministry of Electricity and Water Page 11 Doing Business 2019 Kuwait Receive sewage inspection from Ministry of Public Works 1 day no charge 10 Agency : Ministry of Public Works 11 Obtain electricity and water plans approval from Ministry of Electricity and 7 days no charge Water Agency : Ministry of Electricity and Water Obtain sewage plans approval from Ministry of Public Works 7 days no charge 12 Agency : Ministry of Public Works 13 Obtain zoning approval from the Municipal Authority 30 days KWD 200 Agency : Municipality of Kuwait BuildCo must request a zoning approval from the Municipality. This initial request can be done electronically. Pursuant to Law 5 of 2005, the Municipality is mandated with the authority to plan the use of land in Kuwait. This involves designating permitted uses of land based on mapped zones which separate one set of land uses from another (e.g. residential, industrial, recreational, etc). Once an area has been “zoned” (e.g. for industrial use), the location of an actual project / industry within the zone has to be approved by the Municipality. The documents that need to be submitted include: - Area plans - Level plans - Sector plans - Floor plans - Boundaries - Sanitary certificate - Contract with the client - Civil IDs - Land deed - Electrical drawings - Mechanical drawings - Fire safety drawings - Master plan approval - Architectural drawings If a change needs to be made, the process has to be started from the beginning. 14 Request and obtain building permit 25 days KWD 200 Agency : Municipality of Kuwait The initial packet of documents needs to be submitted electronically to the Municipality. Most of the documents are submitted as scanned copies. The website for submission is: www.baladiya.gov.kw BuildCo must submit Application Form 1 for a building license and attach the following documents (including the documents described in the procedures above): • A copy of the deed of title to the land, allocation decree, or lease agreement. In the case of an allocation decree or lease agreement, a recent rent receipt must be submitted. • A copy of the architectural contract between BuildCo and an accredited engineering firm responsible for the architecture of the building • Scanned letter of the zoning approval • Original soil test report • Approval from the Fire and Safety Department • Approval from the Roads Department, if underground parking is included (which does not apply to the warehouse project) • Scanned Form 2, Undertaking of compliance of the plans with the buildings codes and cadastres, which should be signed and submitted (by an engineering firm) • Scanned Form 3, Undertaking of compliance with the construction plans, which should be signed and submitted (by an engineering firm) • Civil ID of the owner • Undertaking to provide specific plans (done by an engineering firm) that meet the requirements of: 1. The Ministry of Electricity and Energy for the electric supply. 2. The Ministry of Public Works for the sewerage system. 3. The Public Authority for Civil Aviation for the height of the warehouse. 4. The Ministry of Communications for the telephone lines. These four documents are scanned and can be sent in advance electronically. Once approved, the private engineer receives a notification that the building permit is approved. Page 12 Doing Business 2019 Kuwait 15 Obtain site take-over letter (supervision commitment license) 3 days KWD 16 Agency : Municipality of Kuwait BuildCo must submit an application for the site take-over letter and attach the following documents: • A copy of the construction license • An undertaking from BuildCo that it shall carry out the construction work on the warehouse or, alternatively, that it has a construction contract with a contractor. In case of a construction contract with a contractor, a copy of the performance bond should be submitted. • An undertaking from an accredited supervising engineer to supervise the construction approved by the municipality. The Municipality will then issue a site take-over letter, which essentially allows BuildCo (or the contractor) to take over the site and begin construction. 16 Submit final report and the file of cadastral measure of the structure to the 1 day KWD 10 Municipality for approval Agency : Municipality of Kuwait BuildCo prepares the end of supervision commitment report with the supervising engineer's signature and the file of cadastral measure of the structure and submits them to Kuwait Municipality. The file will be reviewed by the Engineering Supervisor (an employee of the Kuwait Municipality) to ensure it contains all the required documentation and information. The file can be submitted online. Kuwait Municipality will then conduct a final inspection to ensure that the construction has been carried out to the necessary specifications (as per the building plans submitted and approved) and complies with the relevant constructions regulations entirely. Once the Kuwait Municipality is satisfied with the information and documentation concerning the building’s specifications and construction works, it will grant the necessary approvals. 17 Receive final inspection from the Municipality 1 day no charge Agency : Municipality of Kuwait The municipality inspects the buildings to ensure compliance with the drawings. 18 Receive final approval certificate from Municipality 18 days no charge Agency : Municipality of Kuwait Once the final inspection is carried out, BuildCo typically receives the final approval certificate from the Municipality within a week. The Municipality then forwards the certificate of no objection to the Ministry of Electricity and Water, the Kuwait Fire Services Directorate and the Ministry of Public Works. 19 Obtain commercial license from Ministry of Commerce 7 days no charge Agency : Ministry of Commerce BuildCo must obtain a commercial license from the Ministry of Commerce certifying that building is for commercial use. Without this license, the warehouse cannot become operational. Obtain water connection 7 days KWD 750 20 Agency : Ministry of Electricity and Water Obtain sewage connection 7 days KWD 750 21 Agency : Ministry of Public Works Receive inspection from the Kuwait Fire and Safety Department 1 day KWD 5 22 Agency : Kuwait Fire and Safety Department Upon conducting a final inspection, the Kuwait Fire and Safety Department will issue a certificate of fire and panic safety. 23 Obtain certificate of fire and panic safety from the Kuwait Fire and Safety 30 days no charge Department Agency : Kuwait Fire and Safety Department Takes place simultaneously with previous procedure. Page 13 Doing Business 2019 Kuwait Details – Dealing with Construction Permits in Kuwait – Measure of Quality Answer Score Building quality control index (0-15) 13.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by 1.0 (0-2) external engineer or firm; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice; Inspections are not mandated by law but commonly occur in practice during construction. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency; Yes, in- house engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 4.0 Page 14 Doing Business 2019 Kuwait What are the qualification requirements for the professional responsible for verifying that the Minimum number 2.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) of years of experience; University degree in architecture or engineering; Being a registered architect or engineer; Passing a certification exam. What are the qualification requirements for the professional who supervises the construction Minimum number 2.0 on the ground? (0-2) of years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer; Passing a certification exam. Page 15 Doing Business 2019 Kuwait Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and - Has two stories with a total surface area of approximately 1,300.6 square meters obtaining final supply (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all Cost required to complete each procedure (% of carried out on public land. There is no crossing of other owners’ private property income per capita) because the warehouse has access to a road. - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or • Value added tax excluded switchboard and the meter base. The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that • Tools to monitor power outages (0–1) there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest • Regulatory monitoring of utilities’ performance supplier. (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor the ranking on the ease of getting electricity. Page 16 Doing Business 2019 Kuwait Getting Electricity - Kuwait Standardized Connection Price of electricity (US cents per kWh) 0.8 Name of utility Ministry of Electricity and Water (MEW) City Covered Kuwait City Indicator Kuwait Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 7 4.7 4.5 3 (25 Economies) Time (days) 65 72.4 77.2 18 (3 Economies) Cost (% of income per capita) 63.8 479.9 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 6 4.2 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Kuwait and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 80.49: Jordan (Rank: 62) 79.34: Oman (Rank: 66) 74.82: Bahrain (Rank: 82) 71.78: Kuwait (Rank: 95) 69.45: Regional Average (Middle East & North Africa) 61.73: Iraq (Rank: 126) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 17 Doing Business 2019 Kuwait Figure – Getting Electricity in Kuwait – Procedure, Time and Cost Time (days) Cost (% of income per capita) 60 60 Cost (% of income per capita) 50 50 40 Time (days) 40 30 30 20 20 10 10 0 0 1 2 *3 4 *5 6 7 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Kuwait and comparator economies – Measure of Quality 8 7 7 6 6 6 Index score 5 5 4.2 4 3 2 1 0 0 Kuwait Bahrain Iraq Jordan Oman Middle East & North Africa Page 18 Doing Business 2019 Kuwait Details – Getting Electricity in Kuwait – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Hire licensed electrical engineer to prepare study of electrical load and 2 calendar days KWD 1,250 power requirement Agency : Electrical engineer licensed by the Ministry of Electricity and Water (MEW) The client hires an engineering consulting firm that is approved by the union of engineers and that has a Supervision Engineer licensed by MEW. The consulting firm (i.e. contractor), will then study and estimate the electrical load and power requirement of the project so as to obtain MEW's approval/authorization for availability of electricity supply (see procedure below). The fees vary depending on the prices set by the contractor. 2 Submit application to Ministry of Electricity and Water and await estimate 21 calendar days KWD 0 Agency : Ministry of Electricity and Water (MEW) The client submits an application to the Distribution department of MEW to get the approval/authorization of electricity supply. The client needs to submit: - The study and estimate done by the consulting firm in Procedure 1. - 3 copies to the concerned governorate engineer of the electrical distribution network (EDN) department requesting approval/authorization for the electricity supply - Copy of the application after necessary approval duly signed and stamped by the governorate engineer - Licenses of construction The request can be submitted online through the following link:https://portal.mew.gov.kw/ However, all forms need to be submitted in person. 3 Receive site inspection by Ministry of Electricity and Water 1 calendar day KWD 0 Agency : Ministry of Electricity and Water (MEW) The client obtains a site inspection from the Ministry of Electricity and Water (MEW) and awaits the estimate of connection fees. After the inspection is done, MEW hands the client a stamped approval and authorization 4 Obtain "no objection" letter from municipality 22 calendar days KWD 0 Agency : Municipality After completing the building works and obtaining the approval of the municipality, the applicant will need to apply for a no-objection letter from the municipality. The municipality will then send the letter by mail to the Ministry of Electricity and Water (MEW) so the latter can install the meter and turn on supply of electricity to the project. 5 Submit final electrical drawings for approval and obtain inspection of 21 calendar days KWD 0 internal wiring Agency : Ministry of Electricity and Water (MEW) During or after execution of the internal wiring the client’s licensed engineer will need to submit the final electrical drawings related to the internal wiring for approval to the Electrical Installation Department of the Ministry. These drawings include air- conditioning, lighting and all other electrical equipment, electrical mains, switches, cable sizes, circuit breakers and fuses. The client will also need to submit a load form in order to obtain inspection of internal wiring and final connection. The load form will then be handed over to the applicant themselves. If the applicant is a company, the form will be handed over to an authorized staff of the company. The approval itself is granted after a couple of weeks, but is obtained in parallel with the external works. The inspection however, happens only after the Ministry of Electricity and Water (MEW) has obtained the letter of no-objection from the municipality. If the drawings meet the Ministry’s specifications, then inspectors from the Electrical Installation Department of the Ministry will inspect the internal installation (size of cables, type of fuses, cable connection process and installation of main panels and sub-panels inside and outside the warehouse). The engineer also needs to submit approvals from the Municipality and the Kuwait Fire Department. The Municipality will also check that plans are actually corresponding to latest drawings. 6 Obtain external works from Electrical Installation Department 10 calendar days KWD 5,114.99 Agency : Ministry of Electricity and Water (MEW) Once the drawings are approved, the client needs to pay the fees of the project to Ministry of Electricity & Water (MEW) for the power supply connection. This cost is for the equipment supplied by the ministry. The payment is done at the estimation department of MEW. The estimation department then gives the green light to the Electrical Distribution Networks Department so that external works can be started. External works are designed and carried out by the Electrical Distribution Networks Department of MEW. A 140-kVA load can be supplied from an existing distribution sub- station in the area, if capacity is available. In the absence of the infrastructure facilities, the holder of the license can allocate a space on the plot not exceeding 5x5 m2 for the MEW to install an electrical transformer to provide additional power to the plot. Having the transformer installed will not result in additional cost to the customer. The former scenario is however, the more likely one for the assumed case. Page 19 Doing Business 2019 Kuwait 7 Obtain meter installation and final turn-on of supply 10 calendar days KWD 140 Agency : Ministry of Electricity and Water (MEW) The client needs to show a receipt of payment to one of the nearest emergency departments of the Ministry of Electricity and Water to obtain final supply. The meter is handed over to the client directly by the Consumer Affairs Department, and the installation is carried out by the Electrical Installation Department. Takes place simultaneously with previous procedure. Page 20 Doing Business 2019 Kuwait Details – Getting Electricity in Kuwait – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 6 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.1 System average interruption frequency index (SAIFI) 0.5 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 5.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 0 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of No supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages No exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.mew.gov. kw/? com=content&act=vi ew&id=92 Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 21 Doing Business 2019 Kuwait Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past • Each procedure starts on a separate day - 10 years. though procedures that can be fully completed - Is registered in the land registry or cadastre, or both, and is free of title disputes. online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. - Has no trees, natural water sources, natural reserves or historical monuments of • Official costs only (such as administrative fees, duties and taxes). any kind. - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 22 Doing Business 2019 Kuwait Registering Property - Kuwait Indicator Kuwait Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 9 5.6 4.7 1 (4 Economies) Time (days) 35 29.7 20.1 1 (New Zealand) Cost (% of property value) 0.5 5.7 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 17.0 14.2 23.0 None in 2017/18 Figure – Registering Property in Kuwait and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 81.07: Bahrain (Rank: 26) 74.03: Oman (Rank: 52) 67.54: Kuwait (Rank: 69) 66.40: Jordan (Rank: 72) 62.11: Regional Average (Middle East & North Africa) 57.74: Iraq (Rank: 113) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Kuwait – Procedure, Time and Cost Time (days) Cost (% of property value) 35 0.6 30 0.5 Cost (% of property value) 25 0.4 Time (days) 20 0.3 15 0.2 10 0.1 5 0 0 1 *2 3 *4 *5 *6 7 *8 *9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 23 Doing Business 2019 Kuwait Figure – Registering Property in Kuwait and comparator economies – Measure of Quality 30 25 22.5 Index score 20 17.5 17.0 15 13.5 14.2 10.5 10 5 0 Kuwait Bahrain Iraq Jordan Oman Middle East & North Africa Details – Registering Property in Kuwait – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Seller notifies Kuwait City Municipality of intention to sell a plot of land 1 day no charge Agency : Kuwait City Municipality A seller (or a designated third party with an authorization from the seller) goes to the Kuwait City Municipality in person to present a preliminary sale/purchase agreement. Other documents that need to be presented include: Civil IDs of both seller and buyer, Articles of Association (if these are two companies) and the original deed. Municipality reviews the submitted documents and authorizes the deal. Only after this step is completed, one can apply for the Cadastral Description Certificate at a different department within the Municipality. 2 Apply for the Cadastral Description Certificate (Shahadat Al-Awsaf) from 1 day KWD 10 the Municipality Agency : Kuwait City Municipality The seller must request a Cadastral Description Certificate from the Municipality providing the details of the property in question (i.e. its size, the developments on it, the zoning, etc) and confirming that the property is in compliance with all the Municipality regulations. This document is prepared following an inspection of the property by an architect of the Municipality. The warehouse is likely to be in one of the following areas: Shuwaikh, Sulaibiya, Sabhan, Al Rai, Anghara and Ardiya. This is however not an exclusive list. The Kuwait Municipality, which is the authority responsible for zoning, may authorize the construction of a warehouse in an area that is not ordinarily used for warehousing. The documentation shall include: -Application from the seller on the selling company's letterhead -Copy of the deed of title of the property provided by the seller -Documents proving the authority of the person submitting the application on behalf of the seller The Cadastral Description Certificate will also include among other things: any violations that the property has incurred (e.g. non-maintenance of the property, or encroachment of the property borders on neighboring plots), any violations of the structure (e.g. if the building does not meet the fire regulations), usage of the plot (e.g. for commercial or residential purpose). Any licenses granted to the plot (e.g. license to have machinery brought onto the property to be used on the plot) and drawings of the plot and structures approved from the Municipality showing the areas and utilization of the plot. 3 Inspection of the property by an architect representing the Municipality 30 days KWD 150 Agency : Kuwait City Municipality The Municipality will send out an inspector/architect to inspect the property in question and collect the relevant information; after which the Municipality will issue the Cadastral Description Certificate and transfer the same along with a letter of no objection to the transfer to the Ministry of Justice to continue the process of the property transfer. The process is typically as follows: the seller will go to the Municipality (with jurisdiction over the location of the warehouse to be sold) to submit an application for an allocation letter (specifying the size of the plot and the buildings on it if any) and a description certificate (description of the existing buildings if any on the plot and size/use of such building). The fee to be paid for these documents is KD150 (for a commercial property). The seller concurrently delivers the warehouse's title deed to the Municipality against a receipt thereof. The engineer/architect responsible for the area then fixes a date to meet with the seller at the warehouse to carry out the inspection, or may alternatively carry out the inspection on his own. Meanwhile, the seller should obtain clearance from the utility authorities (i.e. electricity, water and telephone). When the Municipality engineer completes the inspection (verifies the deed against the actual plot of land and stores report at the Municipality) and the Municipality has issued the descriptions certificate and the allocation letter for the property, the seller will be issued with a receipt with a reference number from the Municipality with which the seller will receive the original title deed, the allocation letter and the descriptions certificate from the Real Estate Registry Division at the Ministry of Justice. Page 24 Doing Business 2019 Kuwait 4 Obtain clearance from the Ministry of Communications 1 day no charge Agency : Ministry of Communications The Seller must obtain a clearance from the Ministry of Communications (necessary for all types of properties both commercial and residential). The clearance is to confirm that the previous owner/seller has settled all related utility bills. 5 Obtain clearance from the Ministry of the Electricity regarding outstanding 1 day no charge electricity bills Agency : Ministry of Electricity and Water Parties obtain a certificate of Ministry of Electricity and Water that there are no outstanding electricity bills or other dues to the Ministry. 6 Obtain a certificate from the Ministry of Commerce and Industry evidencing 1 day KWD 10 the signatory authority of the legal representative of the parties Agency : Ministry of Commerce and Industry Parties obtain a certificate from the Ministry of Commerce and Industry evidencing the signatory authority of the legal representative of the parties who will sign the sale agreement, together with copies of their civil identification cards, in order to check that the companies are authorized to buy or sell property in their Articles of Association. They obtain Form I "Undertaking & Acknowledgement" and Form IX "Acknowledgement of the Representative" from the Department of Commercial Companies at the Ministry of Commerce and Industry, that must be submitted for registration in Procedure 6. Form I shows that the parties exist and have the power to conclude the sale/purchase transaction in accordance with their own Article of Association. Form IX confirms the authority of their representatives who follow up the Procedures with the Department. 7 Obtain a new deed from the Contracts Control Department of the Real 1 day KWD 2,549.62; (0.5% Estate Registration Office of the Ministry of Justice of property value Agency : Real Estate Registration Office at the Ministry of Justice (registration fee)) Once the ‘No Objection’ letter is received from the Municipality, the parties receive a phone text message to come to the Ministry of Justice to complete the transaction. The seller must prepare an application requesting a transfer of title to be filed with the Contracts Control Department of the Real Estate Registration Office of the Ministry of Justice. The Contracts Control Department reviews the application and the attached documents in person in the matter of about 30 minutes. Once approved, the same is printed on the official pink papers used by the Ministry and becomes ready for signature. The 0.5% registration fee is paid to the Department of Real Estate Registration & Authentication (Ministry of Justice) upon the completion of the registration procedures, which approves the submitted documents before parties sign the notarized sale contract. The documentation shall include: -original deed -IDs of seller and buyer -Cadastral Certificate from the Municipality -confirmation of payment for the land through a certified bank check 8 Legal representative of the parties must appear in person to sign the sale 1 day KWD 5 agreement before the notary public Agency : Notary public at the Ministry of justice The parties must appear in person, or through their attorneys, to sign the sale agreement before the notary public. The notary public verifies the contents of the written agreement (a form commonly prescribed by the Ministry of Justice), authenticates the required signatures, and satisfies all other related matters. 9 The sale agreement is recorded under the name of the buyer by the 1 day no charge Contracts Control Department Agency : Contracts Control Department at the Ministry of Justice The authorized third party (or buyer and seller) gives the notarized sale agreement to the Contracts Control Department officer for it to be recorded under the name of the purchasing company. The sale agreement is used as the deed of title. An original of the sale agreement, proving title, is issued to the buyer there. It is printed on the special authorized paper and is stamped. Takes place simultaneously with previous procedure. Page 25 Doing Business 2019 Kuwait Details – Registering Property in Kuwait – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 3.0 What is the institution in charge of immovable property registration? Real Estate registration and authentication department of the the Ministry of Justice In what format are the majority of title or deed records kept in the largest business city—in a Computer/Scann 1.0 paper format or in a computerized format (scanned or fully digital)? ed Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions No 0.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Municipality In what format are the majority of maps of land plots kept in the largest business city—in a Computer/Scann 1.0 paper format or in a computerized format (scanned or fully digital)? ed Is there an electronic database for recording boundaries, checking plans and providing No 0.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Separate 0.0 or mapping agency kept in a single database, in different but linked databases or in separate databases databases? Do the immovable property registration agency and cadastral or mapping agency use the Yes 1.0 same identification number for properties? Transparency of information index (0–6) 1.5 Who is able to obtain information on land ownership at the agency in charge of immovable Only 0.0 property registration in the largest business city? intermediaries and interested parties Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: https://www.moj.g ov.kw/AR/pages/ DeptProcedure.a spx?ItemID=156 Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: https://www.moj.g ov.kw/AR/pages/ DeptProcedure.a spx?ItemID=156 Does the agency in charge of immovable property registration commit to delivering a legally No 0.0 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Number of property transfers in the largest business city in 2017: In Kuwait City for 2017: 6219 Page 26 Doing Business 2019 Kuwait Who is able to consult maps of land plots in the largest business city? Only 0.0 intermediaries and interested parties Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, in person 0.0 and if so, how? Link for online access: Does the cadastral or mapping agency commit to delivering an updated map within a No 0.0 specific time frame—and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 8.0 Are all privately held land plots in the economy formally registered at the immovable property Yes 2.0 registry? Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable property registry? Are all privately held land plots in the economy mapped? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 4.5 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? No 0.0 Is there a specific compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of identity documents? No 0.0 For a standard land dispute between two local businesses over tenure rights of a property Court of First worth 50 times gross national income (GNI) per capita and located in the largest business Instance city, what court would be in charge of the case in the first instance? How long does it take on average to obtain a decision from the first-instance court for such a Between 1 and 2 2.0 case (without appeal)? years Are there any statistics on the number of land disputes in the first instance? No 0.0 Number of land disputes in the largest business city in 2017: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 27 Doing Business 2019 Kuwait Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions Credit registry coverage (% of adults) relating to the use of movable collateral. • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 28 Doing Business 2019 Kuwait Getting Credit - Kuwait Indicator Kuwait Middle East & OECD high Best Regulatory North Africa income Performance Strength of legal rights index (0-12) 1 2.2 6.1 12 (5 Economies) Depth of credit information index (0-8) 6 5.1 6.7 8 (42 Economies) Credit registry coverage (% of adults) 15.5 14.7 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 30.7 15.5 65.3 100.0 (25 Economies) Figure – Getting Credit in Kuwait and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 45.00: Bahrain (Rank: 112) 36.00: Regional Average (Middle East & North Africa) 35.00: Jordan (Rank: 134) 35.00: Kuwait (Rank: 134) 35.00: Oman (Rank: 134) 0.00: Iraq (Rank: 186) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Kuwait and comparator economies 8 7 6 Index Score 5 4 3 2.2 2 1 1 1 1 0 0 0 Kuwait Bahrain Iraq Jordan Oman Middle East & North Africa Page 29 Doing Business 2019 Kuwait Details – Legal Rights in Kuwait Strength of legal rights index (0-12) 1 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and No replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be No secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by No asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow No the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Kuwait and comparator economies 8 8 7 7 6 6 6 5.1 Index Score 5 4 3 2 1 0 0 Kuwait Bahrain Iraq Jordan Oman Middle East & North Africa Page 30 Doing Business 2019 Kuwait Details – Credit Information in Kuwait Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or No No 0 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 6 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 973,054 472,791 Number of firms 0 17,617 Total 973,054 490,408 Percentage of adult population 30.7 15.5 Page 31 Doing Business 2019 Kuwait Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-10): - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Governance safeguards protecting shareholders Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price from undue board control and entrenchment is equal to 10% of Buyer’s assets and is higher than the market value. - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 32 Doing Business 2019 Kuwait Protecting Minority Investors - Kuwait Indicator Kuwait Middle East & OECD high Best Regulatory North Africa income Performance Extent of disclosure index (0-10) 5.0 6.4 6.5 10 (13 Economies) Extent of director liability index (0-10) 9.0 4.7 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 4.0 4.5 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 3.0 5.1 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 6.0 4.7 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 8.0 5.8 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Kuwait and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 66.67: Bahrain (Rank: 38) 58.33: Kuwait (Rank: 72) 51.83: Regional Average (Middle East & North Africa) 46.67: Iraq (Rank: 125) 46.67: Jordan (Rank: 125) 46.67: Oman (Rank: 125) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Kuwait and comparator economies – Measure of Quality Kuwait 8 9 5 6 3 4 Bahrain 7 4 8 7 9 5 Iraq 3 5 4 3 8 5 Jordan 8 4 4 6 3 3 Oman 4 5 8 4 4 3 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 Middle East & North Africa 5.8 4.7 6.4 4.7 5.1 4.5 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 33 Doing Business 2019 Kuwait Details – Protecting Minority Investors in Kuwait – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 6 Extent of disclosure index (0-10) 5.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) Yes 1.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) No disclosure 0.0 obligation Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 1.0 transaction only Must Buyer immediately disclose the transaction to the public? (0-2) No disclosure 0.0 obligation Extent of director liability index (0-10) 9.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if unfair or 2.0 2) prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Liable if unfair or 2.0 Buyer (0-2) prejudicial Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) Yes 1.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if unfair 2.0 or prejudicial Ease of shareholder suits index (0-10) 4.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Documents that 1.0 the defendant relied on Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) No 0.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 5.7 Extent of shareholder rights index (0-10) 3.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of No 0.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Do shareholders automatically receive preemption rights every time Buyer issues new No 0.0 shares? Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Page 34 Doing Business 2019 Kuwait Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a No 0.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a No 0.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to Yes 1.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 6.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of Yes 1.0 directors? Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board Yes 1.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0 period set by law? Extent of corporate transparency index (0-10) 8.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the No 0.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 35 Doing Business 2019 Kuwait Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and • Collecting information, computing tax payable mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The Total tax and contribution rate (% of commercial machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an • Dividend, capital gains, financial transactions incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. taxes discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 36 Doing Business 2019 Kuwait Paying Taxes - Kuwait Indicator Kuwait Middle East & OECD high Best Regulatory North Africa income Performance Payments (number per year) 12 17.7 11.2 3 (Hong Kong SAR, China) Time (hours per year) 98 196.7 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 13.0 32.7 39.8 26.1% (32 Economies) Postfiling index (0-100) 50.08 84.41 None in 2017/18 Figure – Paying Taxes in Kuwait and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 93.89: Bahrain (Rank: 5) 92.48: Kuwait (Rank: 7) 90.16: Oman (Rank: 12) 74.52: Regional Average (Middle East & North Africa) 71.48: Jordan (Rank: 95) 63.55: Iraq (Rank: 129) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Kuwait and comparator economies – Measure of Quality 100 85.32 80 Index score 60 50.08 40 34.69 21.43 20 0 Kuwait Bahrain Iraq Jordan Oman Middle East & North Africa Page 37 Doing Business 2019 Kuwait Details – Paying Taxes in Kuwait Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Employer 12.0 98.0 11.5% gross salaries 12.97 paid -Social security contributions Employee 0.0 withheld 10.5% gross salaries 0.00 not included paid - Social security contributions Totals 12 98 13.0 Page 38 Doing Business 2019 Kuwait Details – Paying Taxes in Kuwait – Tax by Type Taxes by type Answer Profit tax (% of profit) 0 Labor tax and contributions (% of profit) 13 Other taxes (% of profit) 0 Page 39 Doing Business 2019 Kuwait Details – Paying Taxes in Kuwait – Measure of Quality Answer Score Postfiling index (0-100) VAT refunds Does VAT exist? No Does a VAT refund process exist per the case study? N/A Restrictions on VAT refund process N/A Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? Not Applicable Time to comply with VAT refund (hours) No VAT No VAT Time to obtain a VAT refund (weeks) No VAT No VAT Corporate income tax audits Does corporate income tax exist? No Percentage of cases exposed to a corporate income tax audit (%) Not applicable Time to comply with a corporate income tax correction (hours) No corporate No corporate income tax income tax Time to complete a corporate income tax correction (weeks) No corporate No corporate income tax income tax Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 40 Doing Business 2019 Kuwait Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its • Transport between warehouse and port/border natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 41 Doing Business 2019 Kuwait Trading across Borders - Kuwait Indicator Kuwait Middle East & OECD high Best Regulatory North Africa income Performance Time to export: Border compliance (hours) 96 58.0 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 602 442.4 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 72 67.9 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 191 244.6 35.2 0 (20 Economies) Time to import: Border compliance (hours) 89 105.4 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 491 536.0 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 96 75.5 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 332 269.0 24.9 0 (30 Economies) Figure – Trading across Borders in Kuwait and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 79.39: Oman (Rank: 72) 79.03: Jordan (Rank: 74) 77.77: Bahrain (Rank: 77) 60.17: Regional Average (Middle East & North Africa) 54.24: Kuwait (Rank: 159) 25.33: Iraq (Rank: 181) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Kuwait – Time and Cost Time (hours) Cost (USD) 120 700 602 100 96 96 600 89 491 Time (hours) 500 Cost (USD) 80 72 332 400 60 300 40 191 200 20 100 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 42 Doing Business 2019 Kuwait Details – Trading across Borders in Kuwait Characteristics Export Import Product HS 29 : Organic chemicals HS 8708: Parts and accessories of motor vehicles Trade partner India Japan Border Shuwaikh port Shuwaikh port Distance (km) 10 10 Domestic transport time (hours) 2 2 Domestic transport cost (USD) 153 125 Details – Trading across Borders in Kuwait – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 72.0 211.0 by customs authorities Export: Clearance and inspections required 30.6 196.0 by agencies other than customs Export: Port or border handling 72.0 195.0 Import: Clearance and inspections required 89.0 172.7 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 89.5 318.3 Page 43 Doing Business 2019 Kuwait Details – Trading across Borders in Kuwait – Trade Documents Export Import Bill of lading Trade license Certificate of origin Certificate of origin Packing list Cargo release order Invoice Terminal handling receipt Export order Commercial invoice Chemical license/EPA Certificate Manifest/Bayan Customs export declaration Bill of lading SOLAS certificate Packing list SOLAS certificate Page 44 Doing Business 2019 Kuwait Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are • Court fees not of adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Page 45 Doing Business 2019 Kuwait Enforcing Contracts - Kuwait Standardized Case Claim value KWD 23,599 Court name Kuwait City Court of First Instance, Commercial Circuit City Covered Kuwait City Indicator Kuwait Middle East & OECD high Best Regulatory North Africa income Performance Time (days) 566 622.0 582.4 None in 2017/18 Cost (% of claim value) 18.6 24.7 21.2 None in 2017/18 Quality of judicial processes index (0-18) 6.5 6.1 11.5 None in 2017/18 Figure – Enforcing Contracts in Kuwait and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 60.02: Oman (Rank: 73) 59.58: Kuwait (Rank: 77) 55.56: Jordan (Rank: 108) 55.04: Regional Average (Middle East & North Africa) 51.75: Bahrain (Rank: 128) 48.02: Iraq (Rank: 143) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Kuwait – Time and Cost Time (days) Cost (% of claim value) 635 642 622.0 Cost (% of claim value) 31.2 598 35 566 582.4 600 520 28.1 30 500 24.7 Time (days) 21.2 25 400 18.6 20 14.7 15.1 300 15 200 10 100 5 0 0 Bahrain Iraq Jordan Kuwait Middle OECD Oman East high & income North Africa Page 46 Doing Business 2019 Kuwait Figure – Enforcing Contracts in Kuwait and comparator economies – Measure of Quality Kuwait 2.5 0 4 Bahrain 2 0 0.5 Iraq 1.5 0 Jordan 3 2 1 2 Oman 2.5 0 4 OECD high income 2.5 3.1 2.3 3.6 Middle East & North Africa 2.2 0.8 0.4 2.8 0 2 4 6 8 10 12 14 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Kuwait Indicator Time (days) 566 Filing and service 26 Trial and judgment 420 Enforcement of judgment 120 Cost (% of claim value) 18.6 Attorney fees 15 Court fees 2.6 Enforcement fees 1 Quality of judicial processes index (0-18) 6.5 Court structure and proceedings (-1-5) 4.0 Case management (0-6) 0.0 Court automation (0-4) 0.0 Alternative dispute resolution (0-3) 2.5 Page 47 Doing Business 2019 Kuwait Details – Enforcing Contracts in Kuwait – Measure of Quality Answer Score Quality of judicial processes index (0-18) 6.5 Court structure and proceedings (-1-5) 4.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? No -1.0 Case management (0-6) 0.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to No 0.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the No 0.0 competent court? 5. Are there any electronic case management tools in place within the competent court for No 0.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for No 0.0 use by lawyers? Court automation (0-4) 0.0 1. Can the initial complaint be filed electronically through a dedicated platform within the no 0.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme No court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 Page 48 Doing Business 2019 Kuwait 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or No consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 49 Doing Business 2019 Kuwait Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best • Assessors’ and auctioneers’ fees insolvency practices have been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 50 Doing Business 2019 Kuwait Resolving Insolvency - Kuwait Indicator Kuwait Middle East & OECD high Best Regulatory North Africa income Performance Recovery rate (cents on the dollar) 32.4 26.3 70.5 None in 2017/18 Time (years) 4.2 2.8 1.7 0.4 (Ireland) Cost (% of estate) 10.0 13.8 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 7.0 5.9 11.9 None in 2017/18 Figure – Resolving Insolvency in Kuwait and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 44.57: Bahrain (Rank: 93) 42.34: Oman (Rank: 100) 39.29: Kuwait (Rank: 115) 32.69: Regional Average (Middle East & North Africa) 30.31: Jordan (Rank: 150) 0.00: Iraq (Rank: 168) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Kuwait – Time and Cost Time (years) Cost (% of estate) 4.5 4.2 25 4.0 Cost (% of estate) 4 20.0 3.5 20 Time (years) 3.0 3 2.8 2.5 13.8 15 2.5 2 9.5 10.0 1.7 9.3 10 1.5 1 3.5 5 0.5 0 0 Bahrain No Jordan Kuwait Middle OECD Oman Practice East high Iraq & income North Africa Page 51 Doing Business 2019 Kuwait Figure – Resolving Insolvency in Kuwait and comparator economies – Measure of Quality Kuwait 4 2 1 0 Bahrain 4 2 1 0 Iraq 4 2 1 0 Jordan 2 2 1 0 Oman 4 2 1 0 OECD high income 5.3 2.8 2.2 1.9 Middle East & North Africa 3.3 2.2 1.2 0.4 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Kuwait and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 80 60 42.2 38.0 40 32.4 27.3 26.3 20 0.0 0 Kuwait Bahrain Iraq Jordan Oman Middle East & North Africa Page 52 Doing Business 2019 Kuwait Details – Resolving Insolvency in Kuwait Indicator Answer Score Proceeding foreclosure Security documents relating to collateral (Hotel) located in Kuwait would be enforced before the Court of First Instance. After Mirage's default, BizBank would initiate foreclosure by enforcing its security interest over Mirage's assets. Other unsecured creditors will file petition at the Court attempting to convert the foreclosure proceeding into liquidation which however won't stay BizBank to proceed with actions against the property securing their rights according to Commercial Law Article 597. Foreclosure proceedings may only be initiated in the event the security documents were endorsed by a writ of execution. Outcome piecemeal sale The hotel will stop operating and Mirage assets will be sold piecemeal in a public auction upon the completion of the proceeding. Time (in years) 4.2 The foreclosure procedure takes approximately 4.2 years until BizBank is repaid some or all of the money owed to it. The delay is largely due to the difficulty in scheduling a court hearing to resolve appeals from relevant parties to BizBank's foreclosure attempt, as well as the preparation and implementation of the auction. It takes at least half a year (probably 8 months) for the Court to review BizBank's initial foreclosure request. If appeals arise from unsecured creditors , the Court will hold hearings and make the decision, which can take up to 3 years. Cost (% of 10.0 The costs associated with the case would amount to approximately 10% of the value of the estate) debtor's estate. Cost incurred during the entire insolvency process mainly include court or government agency fees (1%), attorney fees (5%), fees of accountants, assessors, inspectors and other professionals (1%), and fees of auctioneers (1%-5%). Recovery rate 32.4 (cents on the dollar) Page 53 Doing Business 2019 Kuwait Details – Resolving Insolvency in Kuwait – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 7.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (b) Debtor may 0.5 file for liquidation only Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 4.0 Does the insolvency framework allow the continuation of contracts supplying essential goods Yes 1.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after No 0.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.0 Which creditors vote on the proposed reorganization plan? N/A 0.0 Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 54 Doing Business 2019 Kuwait Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 55 Doing Business 2019 Kuwait Labor Market Regulation - Kuwait Details – Labor Market Regulation in Kuwait Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) 60.0 Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study (US$/month) 231.1 Ratio of minimum wage to value added per worker 0.1 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 50.0 Premium for overtime work (% of hourly pay) 25.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men No Restrictions on weekly holiday? Yes Restrictions on overtime work? Yes Paid annual leave for a worker with 1 year of tenure (working days) 30.0 Paid annual leave for a worker with 5 years of tenure (working days) 30.0 Paid annual leave for a worker with 10 years of tenure (working days) 30.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 30.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 13.0 Notice period for redundancy dismissal for a worker with 5 years of tenure 13.0 Notice period for redundancy dismissal for a worker with 10 years of tenure 13.0 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 13.0 Severance pay for redundancy dismissal for a worker with 1 year of tenure 2.1 Page 56 Doing Business 2019 Kuwait Severance pay for redundancy dismissal for a worker with 5 years of tenure 10.7 Severance pay for redundancy dismissal for a worker with 10 years of tenure 32.5 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 15.1 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? No Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 70.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 6.0 Page 57 Doing Business 2019 Kuwait Business Reforms in Kuwait In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2019 Starting a Business: Kuwait made starting a business easier by eliminating the paid-in minimum capital requirement. Protecting Minority Investors: Kuwait strengthened minority investor protections by requiring an independent review of related-party transactions and clarifying ownership and control structures. DB2018 Starting a Business: Kuwait made starting a business easier by establishing a one-stop shop and improving online registration. Registering Property: Kuwait made registering property easier by lowering the number of days necessary to register property and by improving the transparency of the land administration system. DB2017 Starting a Business: Kuwait made starting a business more difficult by increasing the time required to register by requiring companies to submit the original documents online and in person. Trading across Borders: Kuwait made exporting and importing easier by introducing customs e-links and electronic exchange of information among various agencies. DB2016 Starting a Business: Kuwait made starting a business easier by reducing the minimum capital requirement. DB2015 Starting a Business: Kuwait made starting a business more difficult by increasing the commercial license fee. DB2014 Starting a Business: Kuwait made starting a business more difficult by increasing the minimum capital requirement. Protecting Minority Investors: Kuwait strengthened investor protections by making it possible for minority shareholders to request the appointment of an auditor to review the company’s activities. DB2011 Labor Market Regulation: Kuwait increased the number of days of paid annual leave and increased the notice period applicable in case of redundancy dismissals. DB2010 Trading across Borders: Kuwait reduced the time required for customs clearance by improving administrative procedures and staff training. Resolving Insolvency: Kuwait enhanced its insolvency process by introducing a new legal procedure that enables financially distressed companies on the verge of insolvency to restructure. DB2008 Dealing with Construction Permits: Kuwait reduced the time required for dealing with construction permits by introducing an automated system for issuing technical approvals for utility connections. Getting Credit: Kuwait’s private credit bureau expanded its coverage by adding retailers to those supplying it with credit information. Page 58 Doing Business 2019 Kuwait Page 59