Kuwait government agrees with proposal to tax expats remittances

Official sources said the government agrees with a proposal to tax remittances made by expatriates and denied that the Central Bank raised objections during a meeting of the parliamentary financial affairs committee to discuss the matter. “What the Central Bank suggested was taking more time to discuss the details of parliamentary proposals to avoid derailing the entire issue,” the sources said.

The sources stressed that represented by the Kuwait Chamber of Commerce and Industry, the private sector had a different viewpoint, which was taken into full consideration and a compromise was reached by agreeing to categorize and reduce the fee value instead of the suggested five percent charge on all remittances regardless of the amount. “It was agreed to collect a two percent charge for amounts up to KD 100, three percent for sums between KD 100 and 500 and four percent for transfers more than KD 500,” the sources explained, noting that this was the final vision that will be discussed further during the committee’s meeting next week.

In addition, the sources warned that the chamber has fears that the fees might have a negative impact on attracting skilled labor to Kuwait, which was refuted by the parliamentary committee, which argued that such fees or taxes will help get rid of marginal labor already overburdening public services. The sources also noted that the argument now was how to control possible attempts to avoid paying the fees, saying that imposing them only on expats might lead to “agreements” with citizens to send the money on behalf of expats.

“Both the committee and the government need to settle this before putting the law into practice, otherwise, the tax might be also imposed on citizens,” remarked the sources, noting the bill will be discuss in parliament in this term to take effect by October if passed.

Budget deficit
The state budget deficit as of the end of February (11 months of the fiscal year) reached KD 2.52 billion after deducting KD 1.44 billion for the Future Generations Fund, according to the finance ministry’s monthly report. The report added the budget deficit dropped by KD 211 million in February compared to January, when it was KD 2.73 billion.

The report explained the drop in the deficit due to growth in revenues, as KD 1.7 billion was added to increase revenues from KD 12.7 billion at the end of January to reach KD 14.4 billion by the end of February. On the other hand, the report showed that expenses increased by KD 937 million by the end of February to reach KD 13.6 billion, compared to KD 12.7 billion by the end of January, which makes the difference between February revenues and expenses reach KD 758 million.