"Foreign Contractor" and "Offset Obligation"

1. Definition of foreign contractor:

1. Foreign contractor is defined as any business entity having all the following characteristics:
2. It does not exist or operate under Kuwait Laws as per Ministry of Commerce and Industry, department of corporations; and
3. As either a Prime or Sub-Contractor has been awarded (directly or as a team) a supply contract by the government of the State of Kuwait and/or any of its public sector institutions; and
4. The goods and/or services to be provided under the said supply contract are defined as foreign produced under Kuwaiti laws.

Kuwaiti business entities acting on behalf of foreign businesses and/or Kuwait business entities formed for the purpose of circumventing the Offset Program will at the discretion of PEO be deemed to be foreign contractors.

2. Offset Obligation:

1. Offset obligation is incurred when the single or cumulative value of supply contract(s) awarded to a foreign contractor is equal to or greater than KD. 1 million.
2. The offset obligation is effective as of the signature date of the supply contract and is equal to 30 % of the monetary value of the said supply contract. 50% of the offset obligation must be completed in the first four years and 100% in eight years.