logo
Bahrain: MPs unanimously vote for 2% remittance tax

Bahrain: MPs unanimously vote for 2% remittance tax

Zawya29-01-2025

Bahrain - MPs have once again unanimously approved a two per cent tax on each expat remittance.
It comes a year after the move was unanimously rejected by the Shura Council following a previous unanimous approval by MPs.
If Shura Council rejects it a second time then a joint session of the National Assembly will vote on it.
Parliament's financial and economic affairs committee chairman Ahmed Al Salloom told his colleagues during yesterday's weekly session that the tax revenue would help reduce reliance on oil, while encouraging foreigners living in Bahrain to spend here rather than send money back home or anywhere else.
Committee rapporteur Zainab Abdulamir said millions of dinars are being remitted and the taxation move would hopefully reduce that.
The Shura Council's financial and economic affairs committee referred a comprehensive report to Parliament on reasons following three meetings with officials from the Finance and National Economy Ministry (National Bureau for Revenue), the Central Bank of Bahrain (CBB), the Bahrain Chamber and the Bahrain Association of Banks (BAB) as well as a representative from the foreign exchange companies.
Shura's financial and economic affairs committee chairman Khalid Al Maskati said the negatives far outweighed the positives and the proposal was found impractical.
Mr Al Maskati
'The expected revenue from 2pc tax is low and doesn't constitute as proper government income, while the damage to proper revenues from other related avenues would be grave,' he added.
'Around 72pc of expats earn less than BD200 a month and they will seek alternative illegal channels to send money.
'It means that either the employers will have to increase wages or increase the cost of service.
'The move could encourage money laundering and result in losses for money transfer agencies ... the list goes on.'
He added that many factors had been overlooked by the MPs.
'This legislation will only reduce remittances made through official channels in favour of illegal money transfer systems,' he added.
'It will also encourage money laundering and the rise of black market practices or unauthorised cryptocurrencies.'
The proposed legislation would contradict mutual and international agreements and conventions and would harm plans to attract and encourage investments.
'For instance, adopting the legislation would mean breaching the Unified Arab Investment Agreement which disallows imposing any restrictions – whether administrative, legal or financial – on Arab capital and investments.'
Mr Al Salloom
Finance and National Economy Ministry officials said that the levy would contradict the basic principles of freedom of money transfer.
It would also violate the concept of tax, as referenced by the Constitutional Court, as such levies should be inclusive, without anyone being singled out, which is not the case with this legislation, the officials pointed out.
'Bahrain has signed many international agreements and mutual pacts with countries across the world on the freedom of money transfer, which it is committed not to breach,' they added.
The proposed law also stipulated that the tax shall be paid during the transfer process at authorised financial institutions with the National Bureau of Revenue recovering the amount from those institutions.
'The move will have a negative impact on the economy, in general, and the financial and commercial sectors, in particular,' said ministry officials.
'Imposing such a tax would cause massive damage as it will lead to the emergence of illegal transfer channels.
'The World Bank and the International Monetary Fund have, in numerous studies, shown that countries that took the approach have faced trouble controlling transfers and we do not want the same situation here.'
The ministry added that such taxes wouldn't be paid by workers and would be forced on sponsors, which would add to the burden on businessmen.
'Such taxes will hugely affect expatriates in leadership positions in companies and banks in Bahrain and it could even lead to them moving to other countries,' it added.
'Bahrain is working towards being a more competitive regional hub. There are also companies that make regular transfers every day, in bulk, and such tax is just illogical and frustrating for them.'
Ministry officials said the legislation would hurt Bahrain's plans to attract investment and global brands and companies.
'We are in a competitive region and have to be considered as a strong choice for investments and this levy doesn't help achieve that,' they added.
CBB officials said the move would create a black market for money transfers as expats or their employers would look for ways to evade the tax.
'The legislation has no exemptions and also includes expats in leadership positions who earn high wages in companies and banks headquartered in Bahrain. It could deter the progress of financial activities, should they opt out of the country.
'Expats also cover GCC nationals and a tax for all would be catastrophic with moves underway to integrate citizens of the six nations.'
The Bahrain Chamber, BAB and exchange companies also rejected the proposal.
Syndigate.info).

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

US envoy says 'no room' for Palestinian state in West Bank currently
US envoy says 'no room' for Palestinian state in West Bank currently

Dubai Eye

time6 hours ago

  • Dubai Eye

US envoy says 'no room' for Palestinian state in West Bank currently

US Ambassador to Israel Mike Huckabee has said that Washington does not wholeheartedly back a Palestinian state under the current circumstances. "I don't think so," Huckabee said in an interview with Bloomberg News published on Tuesday, when asked if a Palestinian state remains a goal of US policy. Asked about Huckabee's comments, the White House referred to remarks earlier this year by US President Donald Trump when he proposed a US takeover of Gaza, which was condemned globally by rights groups, Arab states, Palestinians and the UN as a proposal of "ethnic cleansing". The White House also referred to remarks by Trump from last year before he won the 2024 election when he said: "I'm not sure a two-state solution anymore is going to work." Asked whether Huckabee's remarks represented a change in US policy, State Department spokesperson Tammy Bruce declined to comment on Tuesday, saying policy-making was a matter for Trump and the White House. "I'm not going to explain them or really comment on them at all. I think he certainly speaks for himself," Bruce told reporters. Huckabee, a former Arkansas governor, has been a vocal supporter of Israel throughout his political career. "Unless there are some significant things that happen that change the culture, there's no room for it," Huckabee was quoted as saying by Bloomberg. Those probably won't happen "in our lifetime," he said. Trump, in his first term, was relatively tepid in his approach to a two-state solution, a longtime pillar of US Middle East policy. Trump has given little sign of where he stands on the issue in his second term. Trump has pursued strongly pro-Israel policies as president and his choice of Huckabee as ambassador signaled that they would continue. The US has for decades backed a two-state solution between the Israelis and the Palestinians that would create a state for Palestinians in the West Bank and Gaza alongside Israel. The latest bloodshed in the decades-old Israeli-Palestinian conflict was triggered in October 2023, when Hamas fighters attacked Israel, killing 1,200 and taking about 250 hostages, according to Israeli allies. US ally Israel's subsequent military assault on Gaza has killed nearly 55,000 Palestinians, according to Gaza's health ministry, while internally displacing nearly Gaza's entire population and causing a hunger crisis. The assault has also triggered accusations of genocide at the International Court of Justice and of war crimes at the International Criminal Court. Israel denies the accusations.

Pakistan hikes defence budget 20%, but overall spending is cut
Pakistan hikes defence budget 20%, but overall spending is cut

Gulf Today

time6 hours ago

  • Gulf Today

Pakistan hikes defence budget 20%, but overall spending is cut

Pakistan Tuesday hiked defence spending by 20% following last month's deadly conflict with India. The government of Prime Minister Shehbaz Sharif announced the increase as part of the budget for the fiscal year 2025-26, in which overall spending will be cut by 7% to 17.57 trillion rupees ($62 billion). Pakistan and India were pushed to the brink of war earlier this year after a gun massacre of tourists in Indian-controlled Kashmir, marking the biggest breakdown in relations between them since 2019. Weeks of tension followed, culminating in missile and drone strikes that resulted in dozens of fatalities on both sides of the border. Finance Minister Muhammad Aurangzeb said the government was allocating 2.55 trillion rupees ($9 billion) for defense compared with 2.12 trillion rupees in the previous budget. India in February increased its defense spending by 9.5%. Sharif told the Cabinet: "All economic indicators are satisfactory. After defeating India in a conventional war, now we have to go beyond it in the economic field as well.' Opposition members of the National Assembly verbally abused Aurangzeb, chanting slogans, throwing scrunched-up copies of the budget at him, whistling, and banging their desks as he gave his address. The coming year's defense allocation is considerably more than the government's expenditure on higher education, agricultural development, and mitigating climate-related risks, to which Pakistan is especially prone. Associated Press

South African parliament passes budget framework
South African parliament passes budget framework

Zawya

time7 hours ago

  • Zawya

South African parliament passes budget framework

South Africa's lower house of parliament passed the budget's fiscal framework and revenue proposals on Wednesday. The budget of Africa's biggest economy has been caught up in political wrangling for months. It has been reworked twice because of disagreements in the ruling coalition over plans to raise value-added tax. A majority of 268 lawmakers, including from the two biggest political parties the African National Congress (ANC) and the Democratic Alliance (DA), voted in favour of the fiscal framework and revenue proposals, while 88 voted against and 2 abstained. The ANC and the DA had been at loggerheads over the budget until the finance minister backtracked on a plan to raise value-added tax. The two parties have more than half of the lawmakers in the 400-member National Assembly. (Reporting by Alessandro Parodi and Sfundo Parakozov; Editing by Alexander Winning)

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store