THE Shura Council is once again set to reject a two per cent tax on each expat remittance, at its weekly session on Sunday.
Last month, Parliament insisted on imposing the levy more than a year after the proposal was unanimously rejected by the upper chamber of the National Assembly – following a previous unanimous approval by MPs.
Despite the Shura’s financial and economic affairs committee saying that the negatives of the “impractical” move far outweighed the positives, the MPs maintained that the revenue would help reduce reliance on oil while encouraging foreigners living in Bahrain to spend their money here.
Should both the chambers insist on their respective stands, a joint vote of the National Assembly will be scheduled on the issue.
A joint vote has not been taken since 2002 to resolve disputed legislations, which means that the topic would likely be put on hold until new MPs and Shura members in 2026 decide to take it up for reconsideration.
“The revenue from a two per cent tax would hardly constitute as proper government income,” said Shura financial and economic affairs committee chairman Khalid Al Maskati.
“Besides, 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 the wages or the cost of service.
“The move could encourage money laundering and result in losses for money transfer agencies ... the list goes on.”
The proposed legislation also contradicts mutual and international agreements and conventions and is likely to 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,” added Mr Al Maskati.
Meanwhile, 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 would not be the case with the proposed legislation.
The officials added that such taxes wouldn’t be paid by workers and would be forced on sponsors, which would add to the burden on businessmen.
The Bahrain Chamber, the Central Bank of Bahrain, National Bureau for Revenues, the Bahrain Association of Banks and exchange companies have all rejected the proposal.
mohammed@gdnmedia.bh
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