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Friday , September 17 2021

1% on KD 99, 2% on KD 100-200 , 3% on KD 300-499 & 5 % on KD 500 and above – Remittance tax on Expats approved

Bill must win government approval

KUWAIT CITY, April 1: The parliamentary Financial and Economic Affairs Committee has approved four bills on imposing tax on remittances of expatriates, taking into account those with low income.

Committee Chairman MP Salah Khorshid said majority of the panel members approved the bills, indicating they have taken into consideration the possibility of imposing lower tax on those with limited income.

He affirmed the opinions of the committee’s advisors, legal experts and constitutional expert Abdel Fattah Hassan were considered in approving these bills to ensure that the Constitution is not violated. He revealed the government has reservations over the proposals, especially the mechanism for imposing tax.

He said the government wants to impose tax on citizens and expatriates, but the committee insisted that tax will be imposed only on remittances of expatriates and the revenue will be about KD 70 million for remittances estimated at KD 19 billion per year.

He went on to say that Saudi Arabia, the United Arab Emirates (UAE) and Bahrain are currently applying this law. He argued that banks and exchange companies are collecting fees for remittances, so he wonders why the government is not taking a similar step in the interest of the State.

He stressed the need to remove obstacles and monitor the implementation of the bills, once approved, under the supervision of the Central Bank of Kuwait (CBK) and Ministry of Finance. He added the bills stipulate punishment in case of failure to comply and the executive authority shall play a role in this regard. He cited the practice in other countries where fees and up to 30 percent tax are collected from expatriates who, he pointed out, are satisfied with the fees and taxes provided they are given residency.

Commenting on the proposal, Rapporteur of the committee MP Saleh Ashour confirmed that they discussed the bills with legal experts and advisers of the panel to avoid constitutional violations. According to the bills, one percent tax will be imposed on remittances ranging from KD 1 to KD 99, two percent for KD 100 to KD 200, three percent for KD 300 to KD 499 and five percent for KD 500 and above. Penalties include fine of not more than KD 10,000 — whether individual or company; imprisonment of not more than five years and fine equal to twice the amount of remittance if the money is transferred through a channel other than the approved exchange companies and banks, Ashour clarified.

The lawmaker also stressed the importance of imposing this tax as it will be added to non-oil revenues in the State budget. He added a period of six months has been specified for completion of bylaws and implementation. He pointed out the lawmakers are keen on implementing the law, indicating there are four proposals and each proposal is supported by a group of MPs.

In addition, committee member MP Faisal Al-Kandari said the proposal was submitted at the beginning of the legislative round as a matter of national responsibility after studies proved that the amount transferred by expatriates exceeded KD19 billion a year.

He went on to argue that the law is applied in all countries, including other Gulf nations and it generates State revenues; pointing out most expatriates do not keep their money inside Kuwait as they usually transfer money to their home countries once they receive their salaries. He believes the enactment of the law will boost the economy, reiterating that the committee has taken into account all segments such that a small percentage of tax will be imposed on those with limited income to guarantee justice for all.

He hopes the government will cooperate with the Parliament in passing a law which will reinvigorate the economy. He added he was surprised when some owners of exchange companies and banks voiced objection to the proposals on social media. In another development, Khorshid confirmed that the pension of 2,681 retired military personnel will be disbursed soon; as the money is now in the hands of the Finance Ministry and they are just waiting for the response of the ministries of Defense and Interior, National Guard and Kuwait Fire Service Directorate (KFSD) to start the disbursement. He said Finance Minister Nayef Falah Al-Hajraf promised to provide the budget in the first week of April to end the nine-year suffering of retired military personnel. Furthermore, Khorshid announced that the bill on amending the Insurance Law is one of the important proposals in the agenda of the committee.

He said MP Safaa Al-Hashem and her team have been tasked to complete the bill, hoping the government will soon submit the 2035 Vision of Kuwait and anything related to the Silk City and development of islands. He explained the bill is aimed at invigorating the economy and diversifying sources of income.

By Abubakar A. Ibrahim Arab Times Staff

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