New expat tax proposed for Kuwait

Expats in Kuwait should be forced to pay a new tax of up to five per cent on remittances, according to proposals submitted by a government official.

Kuwaiti MP Faysal Al Kandari has demanded an overhaul of the state’s policies in the hope that the tax would bring a new source of revenue, particularly as it is deals with the financial consequences of the downfall in the price of oil.

Under the proposal, expatriates will pay two per cent on any remittance of less than KD100 (US$332). However, the tax goes up to four per cent on remittances between KD100 (US$332) and KD499 (US$1659), and to five per cent on remittances that exceed KD500 (US$1662), according to a report in Kuwaiti daily newspaper Al Rai on Monday.

The tax money could be collected through fiscal stamps to be issued by the finance ministry, said the MP.

In June last year, another Kuwaiti MP Kamel Al Awadhi submitted a similar proposal and argued that the fees to be collected would contribute towards the highly subsidised services foreigners receive from the state.

However, the proposal was rejected by the parliament’s legislative committee at the time.

In his proposals Al Kandari added that all money orders and cheques should be sent by the accredited banks and money exchanges to the finance ministry for scrutiny and control.

He also said in his new proposal that those who break the law in any way, including sending money in a non-regular way, should be sent to jail for up to six months or made to pay a fine of up to KD10,000 (US$33,244). According to Al Rai, the MP believes that the new tax would provide the state with an additional source of revenue of at least KD20m annually.

He based his calculations on the premise that the minimum annual remittance figures in Kuwait were KD2bn.

Al Kandari said that “imposing the remittance tax in a fair and just way would help the state improve the standards of services.” A decision as to whether or not to approve or reject Al Kandari’s plans has not yet been made.

Around two thirds of the 3.3m people living in Kuwait are foreigners, mainly non-skilled workers in the construction and service sectors.

Indians make up the largest community whereas Egyptians constitute the largest Arab community in the northern Arabian Gulf state.

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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