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Kuwait to Impose Tax on Expat Remittances

The tax on remittances has returned to the scene again, despite many economic warnings about its negative repercussions, reports Al-Rai daily. While those in charge of economic affairs felt that the remittance tax on expatriates was almost as large as their benefits, they suggested resorting to alternative, higher-yielding solutions that would add real revenue to the state treasury.

Experts told the daily that “It would be best to open channels of investment to attract the funds of expatriates inside Kuwait in line with the Vision 2035, the vision of transforming the country into a financial and commercial center.” For his part, the economic expert, Mohammed Ramadan said, “The insistence of Parliament to pass a bill to impose the tax on the transfer of money by the expatriates despite the negative effects raises several questions about the real purpose of it, especially that the concerned in the government along with the IMF and the international community has warned of repercussions on the local economy.”

Ramadan pointed out that the insistence on passing the law, despite the expected negative effects, is nothing more than an electoral gain by some MPs, saying that the implementation of the tax if approved eventually will be failure and open the door to the black market transfers.

Ramadan called on MPs to “adopt a similar project that avoids many of the negative effects of the remittance tax, by imposing a progressive tax on the income of expatriates from the source paid, and borne by the same employer, which yields guaranteed returns.” The tax on income of expatriates can be applied at all levels of income, whether limited or high, according to the system of salaries, the value of a tax link and varying rates, which ensures the state’s guaranteed income from high-income expatriates who can easily bear the consequences.

Ramadan pointed out that the proceeds of the implementation of this proposal will be high considering that it will help the government to implement the replacement policy in the private sector, as employers will then resort to employ Kuwaiti talent to avoid paying the tax.

Talal Bahman, Vice-President of the Federation of Exchange Companies in Kuwait, said that the general framework for dealing with expatriate issues is contradictory. Deputies are trying to impose a tax that has a negative impact on them on the pretext of achieving economic benefits.

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