The members of the financial committee voted four to one to refer the remittance tax bill to parliament for debate on 17 April, reports regional newspaper Gulf News.
If the draft is approved by the 65-member parliament, it will be sent to the government for final approval before being passed into law.
Rising charges and serious penalties
Workers in Kuwait sent around KWD19bn (£44.9bn, $63.2bn, €51.4bn) to their countries of origin or families over the past five years.
The bill would levy a tax depending on the sum being transferred.
For remittances up to KWD90, there would be a charge of 1%. This would rise to 2% for KWD100-200, 3% for KWD300-499 and 5% for KWD500 and more.
If the tax remittance bill is passed, Kuwaiti banks or money-changers that do not comply with the rules could face a maximum fine of KWD100,000.
If an expat remits money through a non-accredited bank, they face a maximum five-year jail sentence and a fine of double the value of what was sent abroad.
Polarising bill
The tax has polarised politicians in the country, with proponents arguing it will generate much-needed revenue as the country looks to diversify its economy.
Salah Korshid, the chairman of the financial committee, said if passed into law, the tax would generate an extra KWD70m from the average KWD19bn in remittances that leave the country each year.
He said to Kuwaiti publication Al Jarida, that other Gulf Cooperation Council (GCC) countries already have similar laws permitting taxes on remittances.
The GCC is made up of Bahrain, Kuwait, Oman, Saudi Arabia and the UAE.
“Banks and money-changers take fees on remittances, and the government should be the one to take them, especially that the figures that we see make us keener on the money and on the interests of the state,” Korshid said.
Opposition has been equally strong, however, with Kuwait’s Central Bank saying the tax would harm the country’s reputation, lead to financial instability and potentially create a black market for remittances.
Saudi expat tax
Kuwait is not the only oil-producing state in the region that is looking to diversify its income.
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.
