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‘2.5 percent regardless of currency’
KUWAIT CITY, Jan 11: MPs Osama Al-Shaheen, Hamad Al-Matar, Abdulaziz Al-Saqaabi, Shuaib Al- Muwaizri and Khalid Al-Otaibi have submitted a bill on taxing remittances.
Al-Shaheen disclosed the bill aims to enhance the public budget, contribute to ongoing efforts to generate more job opportunities, and limit the transfer of money to other countries; taking into consider ation the facts revealed by the Financial Crimes Enforcement Network (FinCEN), Paradise and Panama documents showing that millions of Kuwaiti dinars were smuggled out of Kuwait and kept in tax haven countries abroad.
Once the bill is implemented, it will generate at least KD 100 million national revenues per year. The bill stipulates penalties for those who will violate its provisions.
At present, the exchange companies are collecting fees for remittances, but the State gets nothing. The State will benefit from remittances through this bill, Al-Shaheen explained.
This bill amends law number 32/1968 which regulates the currency, Central Bank of Kuwait (CBK) and banking procedures. It adds two articles to the aforementioned law as follows: Article 71 bis mandates the Central Bank of Kuwait to take the necessary steps to obligate local banks, branches of foreign banks and money exchange companies to collect tax on remittances – 2.5 percent of the amount remitted regardless of the currency. This tax will be added to the State treasury.
Money transfers related to agreements on investment protection and money transferred by the government are tax-exempt. The Central Bank must exempt Kuwaitis studying abroad, those undergoing treatment overseas treatment, and if the transferred amount is less than KD 10,000 per year from paying such tax.
Article 85 bis specifies the penalties for whoever violates the law such as fine equal to twice the amount transferred. In case the violation is repeated, the penalty is toughened – closure of the erring company. The executive regulations will be drafted as per the decision of the finance minister within six months of enforcing the law.
In addition, MP Fayez Al-Jomhour submitted a proposal to establish Islamic Studies institutes in the six governorates.
Meanwhile, MP Hamdan Al-Azmi criticized the tender for the provision, installation and operation of the Integrated Tax Administration System (ITAS) that the Ministry of Finance floated recently. He wonders why the ministry took such a step even if there is no law on imposing tax. He warned the National Assembly will not remain idle as it is keen on addressing the issue.
He said Minister of Finance Khalifa Musaed Hamada and His Highness the Prime Minister Sheikh Sabah Al-Khalid should be held responsible for this blunder, urging both officials to cancel the tender as a way of rectifying the mistake. He pointed out the proper way is for the government to submit a bill on imposing tax and float the tender once the bill is ratified.
On the other hand, MP Muhannad Al- Sayer forwarded queries to the finance minister about the tender. He asked about the objective of ITAS, targeted categories, if these categories include companies and individuals, and classifications of individuals if they are among the targeted categories.
By Saeed Mahmoud Saleh Arab Times Staff