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MPs tussle on remittance tax – Deep divisions
April 9, 2018, 8:35 am

The issue of remittance tax has led to a state of tug-of-war currently in the parliamentary arena between supporters and opposers of this tax, with each side having their own arguments and evidences, reports Al-Rai daily.

Now that the Parliament’s Finance Committee has referred the bill to the National Assembly after approving it, the upcoming session is expected to be stormy amid deep divisions among lawmakers concerning the issue.

While some MPs downplay the impact of the implementation of this law and say it will not significantly affect the income of expatriates, and will contribute in improving the state revenues and play a role in diversifying the sources of income, other MPs stress the need to wait prior to adopting any legislation that may affect the financial and economic situation, and to conduct thorough technical studies in this regard.

Head of the Parliament’s Legislative Committee Al- Hamidi Al-Subai’e affirmed the need for an integrated action plan for dealing with the demographic problem instead of taking procedures that have no effect. He insisted on the significance of an integrated system and a specific vision to find solutions to all problems.

Al-Subai’e said, “The government needs to find a comprehensive solution. I do not think levying the remittances of expatriates will have an effect especially since we are still discussing the constitutionality of the proposal.”

He added, “We have to wait before implementing any legislation that can have implications on the financial and economic situation. I call for the launch of technical studies that will take into account the pros and cons of any legislation or decision related to the lives of expatriates.”

Meanwhile, Chairman of the Replacement and Employment Crisis Committee Khalil Al- Saleh expressed surprise by the commotion raised concerning the imposition of taxes on remittances of expatriates.

He said, “This system is implemented in all countries including Gulf countries but we do not hear any voices there demanding cancellation. So what is the reason behind all the uproar when we planned to approve the draft law?” Al-Saleh posited, “KD 1 for the transfer of KD 100 is not a big amount.

Expatriates pay the same or more at the banks and money exchange offices without expressing resentment.” He insisted that such legislation must be approved in order for the state to obtain revenues.

Al-Saleh said, “Kuwait has embraced expatriates for decades. However, such foreign remittances must be curbed because the massive amounts transferred outside the country have a direct impact on the country’s economy. It is unreasonable for the government and Parliament to stand idle and watch Kuwait’s money being pulled out of the country.”

He indicated, “There are certain communities that have to be monitored, because they transfer on a monthly basis amounts that are ten times more than the salaries they receive in their home countries. There is definitely a defect.” Al-Saleh added, “Let us not believe that the imposition of taxes will affect the real-estate market, or will lead to the emergence of a black market. If there are firmness and controls, we will not see any of such negative phenomena.”

Regarding the demographic issue, he said, “I do not think the taxes will have an impact,” stressing the need for the bodies concerned with demographics to ensure the proportion of Kuwaitis is increased to at least 40 percent of the total population instead of 30 percent within five years. He also stressed the need to fix the number of expatriates and dispose of marginal workers.

Al-Saleh called for limiting each community to 20 percent of the total number of expatriates. He hinted about a community the number of which is close to that of Kuwaitis, adding, “This is too much and it must be stopped immediately.”

He called on the government to put in place real procedures and clear vision to address the imbalances in the demographic structure. Furthermore, Rapporteur of Parliament’s Finance Committee MP Saleh Ashour affirmed that the bill passed by the committee to levy remittances of expatriates will not have any negative effects on the country’s financial or social situation.

He said the tax rate for the categories of remittances are very low compared to the interests imposed by banks and money exchange offices, assuring that it will not affect the lives of expatriates.

MP Ashour indicated that such systems are applied in Saudi Arabia, the United Arab Emirates and Bahrain without any impact on the demographics or the lives of expatriates. He insisted that adoption of this law to levy the remittances of expatriates will have a positive return on the state revenues, and will not significantly affect the income of expatriates.

Also, MP Safaa Al-Hashim said she considers the taxes imposed on the remittances of expatriates as a source of income for the state and will serve as an alternative to the sole revenue source, which is oil.

She affirmed that the remittance tax will have no impact on the income of expatriates, adding that she does not think it will impact the real estate market or will push expatriates to send their families back to their home countries.

In addition, MP Riyadh Al-Adsani said imposing tax on remittances of expatriates must be studied in all aspects including the extent of its impact on the internal economy.

He asked, “If we want to impose tax, then what are the rates? How will they affect employment? The treatment should focus on finding a solution to the problem instead of creating a problem that is bigger than the original problem.”

Al-Adsani stressed the need to eliminate marginal workers and residency traders, adding, “This is top priority. If any step is required to be taken after that, levying the remittances of expatriates can then be considered, especially since expatriates have salaries varying from low to medium to high. This, however, should be studied.”

He indicated that expatriates have lately been sending their money to their countries due to fear of adoption of this law, revealing that the rate of remittances have increased by 25 percent because expatriates want to send their money before the decision is implemented.


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