Expert warns against tax on remittances

Such moves would negatively impact Kuwait’s economy, financial expert Talal Bahman says

Afinancial expert in Kuwait has warned against imposing taxes on remittances by expatriates, saying such moves would have negative repercussions on the economy.

Several lawmakers have argued for imposing taxes on remittances by expatriates, saying that it could generate a new source of revenue for the state as it is dealing with the financial consequences of the decrease in the oil prices.

Under one proposal, expatriates would pay two per cent on any remittance of less than 100 dinars and up to four per cent on remittances between 100 and 499 dinars, and five per cent on remittances that exceed 500 dinars.

The proposed taxes would not bring in significant revenue to the state and would also have a chilling effect on investment from abroad which could help add diversification of the sources of income.

“Instead, we should focus on creating jobs for Kuwaitis that generate revenue,” he said, adding that the country needed to boost its domestic production and reduce imports, Talal Bahman, the vicepresident of the Exchange Association said.

Alternatively, the proposals clash with country’s moral values and the concept of Kuwait as the “Land of Humanity”.

Instead of punishing expats, “Kuwait should be fostering an attractive environment for them which would encourage them to invest or save their money here,” he said.

“This means providing real investment opportunities which could raise levels of liquidity in the market which will stir up the Kuwaiti economy as a whole.”

Black market

By taxing remittances, expatriates could also turn to alternative ways to send money home including accessing the black market and money laundering, the financial expert warned.

Finally, the proposals would encourage skilled professionals to leave the country and seek employment elsewhere, he said.

“Lawmakers should be cautious when they propose economic legislation without thoroughly studying their impact and results on the country as a whole,” Bahman warned.