Kuwait moves to tax remittances, thousands of Indians could be affected
Under the draft, any bank or moneychanger that does not comply with the proposed law will be fined up to 10,000 dinars while anyone who does not remit money through accredited banks and moneychangers will be imprisoned.world Updated: Apr 04, 2018 10:20 IST
A Kuwaiti parliamentary panel has proposed a draft law to impose a tax on remittances by expatriate workers, a move, which if implemented, could affect hundreds of thousands of Indians working in the country.
The financial and economic affairs committee of the Kuwaiti Parliament on Sunday approved the bill stipulating taxes on remittances by expatriates, the state-run Kuwait News Agency reported.
According to the proposed law, a fee of 1% would be imposed on remittances by workers with salaries of up to 90 dinars ($300), 2% on remittances by workers with salaries of 100 dinars to 200 dinars ($333 to $ 667), 3% on remittances by workers with salaries of 300 dinars to 499 dinars ($1,000 to $1,665) and 5% on remittances by workers with salaries of 500 dinars to 1,664 dinars ($1,668 to $5,550).
The remittance tax will be in addition to commission charged by moneychangers and banks. Under the draft, any bank or moneychanger that does not comply with the proposed law will be fined up to 10,000 dinars, while anyone who does not remit money through accredited banks and moneychangers will be imprisoned for a maximum of five years and fined an amount that is double the money sent abroad.
Salah Khorshed, the chairperson of the parliamentary committee, said in a statement that the bill was approved by two-thirds of the members of the panel on the condition that the taxes to be imposed on money transfers by low-income expatriate workers “must be low”.
He forecast the collection of up to 70 million dinars ($233 million) a year from the fees on remittances, which are estimated at 19 billion dinars ($63 billion) per year.
The bill will now be referred to Parliament for debate. If it is approved by MPs, it will be referred to the government and will become law if the cabinet accepts it too.
However, media reports said the move has been opposed by the Kuwait government, the central bank and financial experts. The legislative committee of Parliament had earlier rejected the draft law, saying it was unconstitutional.
The central bank said imposing taxes on remittances would harm Kuwait’s reputation, weaken the country’s financial situation, affect the fight against money laundering and terrorism and create a parallel black market for remittances, Gulf News reported.
The commission’s rapporteur, Saleh Ashour, said the panel discussed the issue extensively with legal experts. Khorshed said the committee had taken into consideration the views of consultants and a constitutional specialist.
He added the government had reservations about the bill “because it has the intention of imposing taxes on both Kuwaiti citizens and expatriates”.
Khorshed also argued three other Gulf Cooperation Council (GCC) countries had a law permitting taxes on remittances.
Kuwait is home to some 920,000 Indians, the largest expatriate community in the country. Indian workers are present in all segments of Kuwaiti society and their total remittances are estimated at $4.8 billion annually.
First Published: Apr 03, 2018 18:19 IST