A proposal being considered by the Dubai government to tax remittances would force expatriates to contribute more to the UAE economy, Dubai Chamber of Commerce and Industry president and CEO Hamad Buamim told Arabian Business.
Buamim confirmed the proposal existed and the government was seeking feedback from relevant organisations such as banks and financial institutions.
No details about the level of tax, how it would be applied or who would be affected have been revealed.
Buamim said he believed expatriates would continue to send money home, but a portion of that would remain in the UAE via the tax.
“I don’t think it will really impact the remittance business [but] it will impact the consumer, no doubt about that,” he said.
“This has really addressed a lot of workers... here who contribute minimally to the economy... this is one way to try to address this issue because all of their funds are [being sent as] remittances.
“It’s still a work in progress, it’s still under discussion so we’ll wait and see.”
As much as 90 percent of the UAE population of 8m is made up of expats, particularly labourers from poorer countries in southern Asia and Africa.
Many foreign workers’ families back home rely on such remittances for survival.
About AED45.1bn ($12.3bn) was sent out of the UAE in the form of remittances in 2012, up from AED41.2bn in 2011, according to the UAE Central Bank.
Some finance industry experts have said a tax on remittances could make the UAE less attractive for foreign workers, which are relied on in most industries.
However, the UAE also is among several Gulf states working to increase their local employment.