Under the proposed tax, expats living in Bahrain who owned a car would have to pay $106 (€89, £78) in annual registration fees, double the amount Bahrainis pay.
Further, the new law would have taxed all funds expats transferred out of the jurisdiction.
The proposed tax was voted down after MPs debated it in parliament on 9 May. Some expressed concerns during the debate a remittance tax would create a black market for illegal money transfers that could damage Bahrain’s status as a financial centre.
In addition to concerns the tax would create a black market, the Bahrain Parliament Financial and Economic Committee labelled the proposed tax unconstitutional prior to the debate.
Bahrain’s decision to reject the remittance tax follows Kuwait’s government endorsing a similar draft law in April this year.
While in July 2017, Saudi Arabia introduced a “family tax” where expats working in the kingdom are required to pay the Saudi Government SAR100 (£21, $27, €23) each month per dependent.
The levy will increase by SAR100 each July, before plateauing at SAR400 in 2020.
According to 2016 census data, 760,000 foreign workers currently live in Bahrain representing more than half of the jurisdiction’s total population.
