Most bankers thought that Kuwait’s punitive rate of capital gains tax on foreigners had been consigned to history in February, when Emir Sabah al-Ahmad al-Jaber al-Sabah gave his approval to a law abolishing the tax.

However, the Central Bank of Kuwait has now told international banks that the Finance Ministry has yet to implement the law and the 55 per cent tax is still on the statute book. Worse still for potential investors, the measure has been referred to lawyers and it could take a further six months to finally abolish the tax.

The saga is just the latest example of regulatory uncertainty in Kuwait. Foreigners can hardly be blamed for favouring the Abu Dhabi Stock Exchange or the Dubai Financial Market over the Kuwait Stock Exchange when they still do not know whether their profits will be hit by a 55 per cent tax.

But general bureaucratic delays and parliamentary opposition to projects backed by foreign investors are more serious impediments to investment in Kuwait than the tax itself.

The bureaucracy obscures some real achievements. The Kuwait Stock Exchange has no restrictions on the foreign ownership of shares, unlike the two UAE exchanges and Saudi Arabia’s Tadawul.

Better still, the government has prevented companies from introducing their own restrictions on foreign buyers. Kuwait also boasts long-established and internationally oriented companies, such as telecoms operator Zain, National Bank of Kuwait and logistics business Agility.

What really unsettles foreign investors is the unwillingness of key institutions, such as the Central Bank and the Finance Ministry, to explain what is happening. These institutions could help reverse Kuwait’s poor record of attracting foreign direct investment by being more open about their attempts to reform a complex and confusing system.