January 12, 2021 finance & economy

MP eyes tax on remittances


MP Osama Al-Shaheen affirmed that billions of dinars exiting the local economy annually, and has reached nearly KD21 billion according to estimates of the last five years, and mentioned that imposing fees on remittances at a rate of 2.5 percent will possibly save the state at least KD100 million annually.

Al-Shaheen said, in a press statement, that MPs Dr. Hamad Al-Matar, Dr. Abdulaziz Al-Saqabi, Khaled Al-Otaibi, and Shuaib Al-Muwaisari, proposed the bill to impose fees on remittances to countries outside Kuwait, as it would provide an added advantage to the local market, create new jobs, boost economies and fields of work in Kuwait.

He indicated that this was taking note of the facts revealed by the Financial Crimes Enforcement Network (FinCEN), Paradise and Panama documents, which provided proof that there are millions of dinars smuggled out of Kuwait, and saved up in tax havens and bank accounts abroad.

He called for tightening supervision and imposing fees that would benefit the local economy. Pointing out that once the proposal is implemented could likely collect 2.5 percent on money transfers abroad, i.e., by simple calculation, approximately adding KD100 million dinars in national revenues per year to the state treasury.

This bill also levies criminal penalties on institutions and individuals who circumvent its provisions.

Currently, the exchange companies collect fees on remittances for expats, but there is no benefit to the State, but it will benefit from remittances through this bill, Al-Shaheen explained.

This bill amends law number 32/1968 which regulates the currency, Central Bank of Kuwait (CBK) and banking procedures, making an additional two articles to the aforementioned law as follows: under Article 71 bis the Central Bank of Kuwait will be obligated to compel local banks, branches of foreign banks and money exchange companies to collect tax on remittances – 2.5 percent of the amount remitted regardless of the currency. This tax will be added to the State treasury.

There will be a tax-exemption on money transfers falling under agreements on investment protection and money transferred by the government. The Central Bank must also exempt Kuwaitis studying abroad, those undergoing treatment overseas treatment, and if the transferred amount is less than KD 10,000 per year from paying such tax.

Article 85 bis outlines penalties for those caught violating the law with the levy of a fine equal to twice the amount transferred. In case of a repeat violation, the penalty is toughened to include the closure of the erring company. The executive regulations will be drafted as per the decision of the finance minister within six months of the law entering into force.

He praised the former MPs Omar Al-Tabtabai, Faisal Al-Kandari and Askar Al-Anzi, and the current MPs Yusef Al-Fadala and Khalil Al-Saleh, who presented in the fifteenth legislative chapter a preliminary version of this bill proposal.

Al-Shaheen believed that the best way to ensure Kuwait benefits is to attack these loopholes by which some corrupt people utilize to steal public funds, and some influential people exploit their public position to collect money, which is then smuggled abroad.

timeskuwait



Top News



finance & economy

New budget showing signs of waste
January 18, 2021
KAFO project launches event on COVID-19
January 18, 2021
Fitch keeps UK outlook negative, debt at...
January 18, 2021