How to Register a Sole Proprietorship (تاجر فردي) in Kuwait

Many freelancers and independent contractors see appeal in operating in Kuwait under a sole proprietorship because it offers simpler administration and full control over the business. You don’t need to form a full corporation, and you can invoice clients directly. That said, Kuwait’s regulatory environment is not always straightforward for small solo ventures. You must navigate commercial license requirements, regulatory oversight, sponsorship rules (for non-Kuwaitis), and ongoing tax compliance. The main challenges are the administrative burdens, costs of licenses, and the lack of a “micro-business” regime tailored for freelancers. The benefits include flexibility, quick decision-making, full ownership (for citizen or GCC owners), and direct client relationships.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Always check official sources or seek professional guidance before proceeding.

What is a sole proprietorship in Kuwait?

In Kuwait, a sole proprietorship is officially known as تاجر فردي (taajir fardī). Some may also refer to it as:

• Sole trader
• Self-employed
• Independent contractor

All of these terms describe one person legally running a business without forming a separate company entity.

How does a Sole Proprietorship (تاجر فردي) work in Kuwait?

تاجر فردي vs. other business structures in Kuwait

There are alternatives in Kuwait to running a sole proprietorship, such as forming a limited liability company (LLC, or شركة ذات مسؤولية محدودة). Below is a comparison to help you understand when each structure might make sense.

Step-by-step guide: How to register a sole proprietorship in Kuwait

Step 1: Check your eligibility

To register a تاجر فردي, you generally must be a Kuwaiti national or a GCC citizen. Non-Kuwaitis (non-GCC) cannot fully own a sole proprietorship and usually require a local sponsor or must form a different legal structure. Certain freelance professions may be reserved for Kuwaitis under recent regulations. You’ll also need a valid visa or residency permit, and you must comply with sectoral licensing requirements.

Step 2: Choose your business name

Select a distinctive business name that complies with Kuwait’s naming rules (no offensive language, not misleading, and relevant to the business activity). Submit it for approval by the Ministry of Commerce and Industry, ensuring it doesn’t duplicate existing names. You may have to provide separate Arabic and English versions, depending on the system requirements.

Step 3: Gather required documents

Typical documents include:

• A copy of your national ID or passport
• Residency permit or visa (for expatriates)
• Proof of address (e.g., utility bill or lease)
• Proposed business activity description and classification
• Name approval certificate
• Any sector-specific permits or regulatory clearance
• If applicable, paperwork related to your local sponsor or partner

Some forms can be downloaded via MOCI’s portal or through Kuwait’s e-government services.

Step 4: Register with MOCI

You file your application through the MOCI, either online or in person. You submit your documents, name approval, and activity description. Once approved, you'll be entered into the commercial register and issued a commercial license to operate legally under تاجر فردي.

Step 5: Pay registration fees and contributions

After your registration is approved, you must pay the relevant fees. These typically include name approval fees, registration charges, commercial license issuance, and municipal or city fees. The amounts vary significantly depending on your business’s activity and where in Kuwait you operate. Foreign-owned setups may also require deposits, security bonds, or sponsor fees. Because these costs differ regionally and by license type, it’s important to check with MOCI or local municipal offices for the exact current fee schedule.

Step 6: Complete post-registration obligations

Once registered, you must maintain accounting records, issue compliant invoices, and renew your commercial license annually. Invoices must show your business name, commercial registration (CR) number, client details, date, sequential invoice number, and service description in Kuwaiti Dinars (KWD). They must be clear, accurate, and stored for at least ten years in line with Commercial Law No. 68 of 1980 and Ministry of Commerce and Industry rules. Foreign-owned businesses must also file annual tax returns with the Ministry of Finance, settle withheld amounts, and obtain tax clearance certificates.

Financial and tax obligations for sole proprietors in Kuwait

You are responsible for:

• Tax: Kuwait does not impose personal income tax on individuals or on businesses wholly owned by Kuwaiti nationals or GCC nationals. However, foreign-owned enterprises carrying out business in Kuwait are subject to a 15 % corporate income tax on profits derived from Kuwaiti sources. Filing is done annually, typically within 3.5 months after the end of the fiscal year.
• Tax retention / withholding: Public agencies and some private clients often retain 5 % of payments to contractors (especially foreign ones) until a tax clearance certificate is presented.
• VAT: Kuwait is part of the GCC VAT framework but has not yet implemented VAT. When implemented, businesses whose revenue exceeds the threshold must register, collect VAT, submit returns, and comply with invoicing rules.
• Social security (for national employees): If you hire Kuwaiti nationals, both you and your employees must register with the Public Institution for Social Security (PIFSS) and make contributions in line with Kuwait’s Social Security Law. Expatriate employees are not covered by the PIFSS system and instead receive end-of-service indemnities under the Kuwait Labor Law No. 6 of 2010.
• Record-keeping: You must retain accurate records of invoices, receipts, contracts, and accounting books. These may be reviewed during audits or tax authority examinations.
• Invoicing: Even before VAT is active, your invoices should include your business name, client details, service descriptions, dates, and sequential invoice numbering. Once VAT is in effect, invoices must additionally detail the tax base and VAT amount.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start a تاجر فردي in Kuwait?
There is no official fixed capital requirement; the needed capital depends on your business size and licensing category.

Do تاجر فردي need to register for VAT?
Not currently; Kuwait has not yet implemented VAT. Once the VAT system is active, if your revenue crosses the threshold, registration will be mandatory.

How much are the standard monthly or annual contributions?
You will pay the registration and license fees (which vary by activity and location). For foreign owners, a 15% tax on profits applies.

Can a تاجر فردي hire employees?
Yes. You must follow labor and immigration law obligations, including work permits, contracts, and, for Kuwaiti nationals, social security contributions.

How long does it take to register as a تاجر فردي in Kuwait?
If all documentation is correct and approvals are smooth, you may complete registration in a few days to a couple of weeks, depending on your business activity and regulatory requirements.

Can foreign nationals register as a تاجر فردي in Kuwait?
Generally no. Non-GCC expatriates cannot fully own a sole proprietorship. You would typically require a local sponsor or consider another structure like an LLC.

Do تاجر فردي need a separate business bank account?
While not always legally mandated, having a dedicated business bank account is strongly recommended for clarity, auditing, and financial management.

What happens if I stop working as a تاجر فردي?
You must apply to deregister or cancel your commercial license with MOCI, settle outstanding tax or withholding liabilities, and formally close your registration.

Are there any government incentives or reduced rates for new تاجر فردي?
Kuwait is pursuing economic reforms and initiatives for SMEs under Vision 2035, but there are no widely advertised incentives specifically for sole proprietors at present.

Can I use Deel as a تاجر فردي to get paid by international clients?
Yes. Deel supports contractors in Kuwait by facilitating global payments, multiple currencies, compliance, and record-keeping.

Does Deel generate compliant invoices for تاجر فردي?
Yes. Deel can produce invoices that meet legal and tax requirements in Kuwait and internationally.

Can Deel help me with taxes as a sole proprietor in Kuwait?
Deel provides downloadable summaries and records you can use for tax filings. While Deel isn’t a substitute for an accountant, it simplifies bookkeeping and compliance.

Does Deel offer contracts for freelancers and تاجر فردي?
Yes. Deel’s templates are localized to comply with Kuwaiti regulations, allowing you to work with clients safely and legally.

Can I access benefits through Deel as a تاجر فردي?
Yes. Deel offers optional perks—such as insurance and retirement plans—that are often unavailable to solo contractors, helping you access benefits usually reserved for employees.