Kuwait saw remittances from expat workers increase by 3.9% last year as the Gulf nation Parliament is pushing to introduce a controversial levy charge on these transactions.
According to data from the Central Bank of Kuwait (CBK), the remittances of foreign workers reached KD4.3bn ($14.1bn) last year compared to KD4.1bn ($13.4bn) in 2017. The biggest total amount of remittances was recorded in the second quarter (KD1.19bn), while the lowest was recorded in the first quarter (KD1.03bn).
As the remittance figures grow, the country's authorities are poised to discuss a 5% levy on the money expats send home. Lawmaker Khalil Al-Saleh said he has started collecting signatures of other members to make the National Assembly debate a draft law stipulating a 5% tax on expatriate remittances.
The draft law was approved by the Assembly Financial and Economic Affairs Committee even after the legal and legislative panel rejected the bill saying it is against the constitution because it involves discrimination against foreigners which is banned by the constitution. But the financial committee adamantly approved the draft law, denying it was discriminatory. The panel, in which leading anti-expat MP Safa Al-Hashem is a member, said imposing the tax will have important economic benefits to the country.
The Central Bank and the Finance Ministry have both warned against the bill saying it would lead to an exodus of expatriate funds from the country and will also lead to a black market for money transfers. MP Saleh, who heads an Assembly panel working to replace expatriate employees with Kuwaitis. The lawmaker said the latest remittance figures reveal serious consequences on the Kuwaiti economy and refused the idea that imposing the levy would have a negative impact.
Click here to subscribe to International Investment's free twice-daily newsletter