For many years, expats including overseas Filipino workers (OFWs) have eyed the Middle East for the attractive salaries and benefits the countries offer, not to mention the no-tax rule in GCC member nations. However, with plans to impose a value added tax scheme in countries such as Saudi Arabia, the UAE, and Kuwait, things are looking to change for the worse – at least for expats.
All that and aggravated by the government’s initiative known as “Kuwaitization” which to aims level the demographic imbalance in the country, there seems to be no stopping at what the government is doing to strain its relationship (if not entirely cut off) expats from society.
Kuwait Looks to Tax Expats 5% on Remittances
A draft law has been submitted by Kuwaiti policy makers to impose 5% tax on expat remittances sent to their home countries. The financial and economic affairs committee gave the approval to the bill and has been submitted to the assembly for approval, as shared in a report by the Arab Times Online.
Prior to this development, the legal and legislative committee and the government had earlier rejected the bill on the basis of the economy will be hurt. However, the Financial and economic affairs committee have justified that the bill was within the constitution and no violation was committed.
According to Article 8 of the agreement for establishing International Monetary Fund (IMF), any member country is prohibited from imposing any discriminating procedures in terms of currency exchange or participation in activities that result in multiplicity of currency prices.
Despite the fact that the IMF had already warned the government against this decision in the past, as the 5% tax scheme on the $84.4 billion remittances coming in the Gulf region would only contribute 0.3% of the region’s total income, which also does not account for any significant boost to the economy, but will even cause further problems in society.
And if this decision would bear no meaningful results to the economy or society in general, this can only be seen as added pressure to what the expats and other foreign nationals have to endure by choosing to work in countries such as Kuwait and those in the Middle East.
At present, expats account for about 70% of Kuwait’s population, 1.1 million of which being Arab expats, and 1.4 million are Asian expats.
If this would not be of any help or considered a “dire” action to boost economy, it looks to be only a move to hurt the interests of expats in the country.