Kuwait Parliamentary Committee Approves Bill to Levy Tax on Expat Remittances

The Parliamentary Financial and Economic Affairs Committee of Kuwait has approved a bill to tax the financial remittances sent overseas by expats.

The chairperson of the committee, MP Salah Khorshed, said in a statement on April 1 that the commission approved the bills after it got consensus from two thirds of the members. The bill has been approved provided the fee imposed on money transfers made by expats in the low-income segment is low, Kuwait news agency KUNA reported.

Khorshed projected that proceeds amounting to about KD 70 million ($233 million) will be collected from the remittances, which are estimated at KD 19 billion ($63 billion) for a period of five years. The panel deliberated extensively on the issue and also consulted legal experts for their opinions, Saleh Ashour, the commission’s rapporteur, said.

The proposed law stipulates that tax of one per cent would be imposed on the salary category of KD 90, while that on the KD 100-200 segment would be two percent. The KD 300-499 segment would have a fee liability of three percent,and those in the KD 500-1,664 segment would be imposed a five percent fee.

The Central Bank of Kuwait objected to the bill, saying that imposing a fee on remittances would cause harm to the country’s reputation, and financial situation and that it would have an impact on the fight against money laundering as well as terrorism. It is also feared to boost a black market to send money overseas, the Gulf News reported.

“Banks and moneychangers take fees on remittances, and the government should be the one to take them, especially that the figures that we see make us keener on the money and on the interests of the state,” Khorshed said, according to Al Jarida.

The bill suggests that the taxes be collected by the Central Bank, which will then be paid to the finance ministry, according to Ashour. The bill also specifies that all financial transfers should be made via official moneychangers and banks, and that illegal channels should not be used, the Kuwait Times reported.

The primary aim of the proposed law is to encourage expats to invest their money in Kuwait. The bill was chosen from four draft laws that were submitted by various groups of lawmakers, according to Khorshed. If the bill is cleared and made a law, it will be the first time that Kuwait will impose a tax on foreign remittances.

The draft bill will now be referred to the government and it will become a law once the cabinet gives its nod.