Parliament gearing up for heated debate over draft law which seeks to tax expat remittances
Manama: Kuwait’s parliament is gearing up for a tumultuous debate over the introduction of a remittance tax for foreigners after two parliamentary committees expressed opposed views on the matter.
Whether to endorse a bill that calls for imposing taxes on the money transferred by foreigners to their home countries opposes the financial committee and the legislative committee and consequently the lawmakers.
The legislative committee has opposed the bill, saying that it was unconstitutional and harmed the country’s reputation and higher interests and should not be endorsed by the parliament.
However, the financial committee this week said that the bill was fully constitutional and beneficial for the state and should therefore be passed by the MPs.
“The legislative committee’s decision to reject the bill was built on constitutional foundations,” MP Al Hameedi Al Sabeei, the head of the committee, said, quoted by Kuwaiti daily Al Rai on Tuesday.
“The bill called for imposing taxes on remittances, but did not mention the category of people who will be paying the fees. The bill failed to discern between punitive measures for individuals and for companies and called for similar legal actions.”
He said that the articles of the bill should be clear and well defined.
“The clarification and good definitions will enable us to express our point of view when the bill is debated at the parliament,” he said.
The government, the central bank and financial experts have warned against imposing fees on remittances.
However, on Sunday, the members of the financial committee voted four to one to refer the bill to the parliament for debate.
The committee said that taxes, to be levied only on foreigners, would provide the state with KD70 million from the remittances that amounted to KD 19 billion.
Under the draft law, remittance taxes will be gradual with a one per cent tax for remittances of up to KD90, two per cent for KD 100-200 remittances, three per cent for KD 300-499 and five per cent for KD 500 and more.
If the draft is approved, it will be referred to the government and in case the cabinet accepts it, it becomes law.
Kuwait would then become the first country in the Gulf Cooperation Council (GCC) to impose such taxes.
The GCC, established in 1981, comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.