KUWAIT CITY: Kuwait Parliament’s financial committee approved bills earlier this month stipulating that expatriates’ remittances should be taxed, analysts voiced concerns that the move could lower inflows of foreign direct investment into the country and harm Kuwait’s financial position as an open market.
Although the bill has been opposed by the legislative committee, it will be referred to the government and, if approved, would become law if accepted by the cabinet, making Kuwait the first Gulf country to impose a tax on remittances.
The second problem is that such a tax restricts capital movement and is effectively a capital control mechanism, according to Alrashidi.
“Such actions causes capital to flee (the) local market and becomes a deterrent for new capital coming to the country. Therefore, it will reduce foreign direct investments in Kuwait.