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Kuwait cannot impose remittance tax on expats - Ownership rights better than taxation
March 31, 2018, 8:17 am
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Kuwait cannot impose tax on the remittances of expatriates because it is a member of international financial organizations and has signed agreements for establishing those organizations which require commitment from all members to abide by the relevant regulations that include avoiding restrictions on the current payments, reports Al-Anba daily.

According to Article 8 of the agreement for establishing International Monetary Fund (IMF), it is not allowed for any member country to take discriminating procedures in terms of currency exchange or participation in activities that result in multiplicity of currency prices.

In the explanatory memo, IMF stated that if the difference between the buying price and selling price of currency exceeds two percent, approval of IMF is required. It is worth mentioning that the relevant parliamentary committee announced the preparation of a proposal to impose four percent tax on the remittances of expatriates.

According to experts, this proposal contradicts the vision of turning Kuwait into an international financial hub. It will force efficient expatriate workers to leave, especially with the loss of the benefit of working in countries that do not impose such tax and since most of the workers in the GCC countries receive low income.

Researcher Mohammad Ramadan said the tax will bring about more harm than benefits. He highlighted the experience of the United Arab Emirates in creating investment opportunities for expatriates to invest their money, stressing that such a step will be more profitable for the state instead of imposing taxes.

Ramadan indicated that imposing such a tax will leave expatriates with no choice but to search for other ways to send their money, even through illegal methods. He added that allowing expatriates to own real estate in Kuwait is a good way of taking advantage of their money.

Meanwhile, experts stressed that Germany has about 19 million immigrant employees, and the average amount remitted annually by them is about $ 5 billion.

On the other hand, Kuwait has about three million expatriates but they remit about $15 billion per year. According to IMF, the maximum revenues expected from imposing this tax are about 0.3 percent of the total national revenues of Kuwait, which is $4 billion. This amount is very less compared to the amount required to bring about the required economic reform.

Source: Arab Times

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