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Kuwait Parliament Approves Tax Remittance Bills

Last April 1, the Kuwait Parliament Financial Affairs and Economic Committee has passed four bills which impose new tax schemes on expat remittances, even those with low or minimum incomes.

According to MP Salah Khorshid, Chairman of Financial Affairs and Economic Committee, a good two-thirds of the panel approved the four proposed bills, explaining that they have also put into consideration the viability of imposing lower taxes on foreign or migrant workers with limited income.

Tax on Expat Remittances Approved

In a statement by MP Khorshid, he explained that all legal points regarding the matter have been consulted with the panel’s advisers, legal professionals, and constitution specialist Abdel Fattah Hassan to make sure that the direction they’re heading with the deliberation of the proposed bills will leave no stones unturned. And upon deliberation, Khorshid shared that the Government has expressed reservations on the proposed bills, particularly regarding with how the taxes are supposed to be imposed.

During the meeting, the Government wishes to impose tax on both nationals and expatriates. However, the panel maintained that the taxes should be only imposed on the remittances expats where the expected revenue to be generated will  reach around KD 70 million from remittances based on the total annual profit of all the expats in the state reaching KD 19 billion.

Khorshid also mentioned that other GCC member nations Bahrain, Saudi Arabia, and the UAE, are already implementing this tax scheme in their own territories. The argument raised during the panel discussion was that financial institutions (banks) and exchange companies place certain fees for remittances, so why shouldn’t the Government when it’s even done for the benefit of the State.

Once the proposed bills have been advanced for implementation, Khorshid pointed out that the Government has to safeguard the process by eliminating potential obstacles and to oversee its proper and consistent execution, with the guidance and support of the Central Bank of Kuwai (CBK) and the Ministry of Finance.

Aside from its scope and provisions, the bills also specify certain penalties where non-compliance is observed, where the executive authority will play an important role. Khorshid even went on to explain that in other countries where taxes imposed on expats reach up to 30 per cent are met through the fees and taxes collected on the basis of their granted residency status.

MP Saleh Ashour, Committee rapporteur, confirmed that the legal and technical aspects of the constitution were all taken into consideration in the presence and approval of legal experts and the panel’s advisers to avoid committing any violations against the constitution. Ashour also expounded on the scope, provisions and punishments enclosed in the bills, which are as follows:

The provisions of the aforementioned bills state that:

  • one (1%) per cent tax will be applied on remittances of expats ranging from KD 1 to KD 99,
  • two (2%) per cent for those ranging from KD 100 to KD 299,
  • three (3%) per cent for remittances between KD 300 to KD 499,
  • and five (5%) per cent for remittances of KD 500 and above.

Individuals or companies who fail to comply with the provisions of this law will be subject to any of the following penalties:

  • a fine of not more than KD 10,000;
  • a fine equal or twice the amount of the remittance processed, if funds are channelled through other than any of the prescribed banks and monetary exchange companies by the Government.

 




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