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Mon 30 Sep 2013 09:23 AM

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Expats would be hit by remittances tax: Dubai boss

Legislation is being planned to address foreigners who ‘contribute minimally’ to the economy, Dubai Chamber of Commerce and Industry head says

Expats would be hit by remittances tax: Dubai boss
Buamim confirmed the proposal existed and the government was seeking feedback from relevant organisations such as banks and financial institutions.

A proposal being considered by the Dubai government to tax remittances would force expatriates to contribute more to the UAE economy, Dubai Chamber of Commerce and Industry president and CEO Hamad Buamim told Arabian Business.

Buamim confirmed the proposal existed and the government was seeking feedback from relevant organisations such as banks and financial institutions.

No details about the level of tax, how it would be applied or who would be affected have been revealed.

Buamim said he believed expatriates would continue to send money home, but a portion of that would remain in the UAE via the tax.

“I don’t think it will really impact the remittance business [but] it will impact the consumer, no doubt about that,” he said.

“This has really addressed a lot of workers... here who contribute minimally to the economy... this is one way to try to address this issue because all of their funds are [being sent as] remittances.

“It’s still a work in progress, it’s still under discussion so we’ll wait and see.”

As much as 90 percent of the UAE population of 8m is made up of expats, particularly labourers from poorer countries in southern Asia and Africa.

Many foreign workers’ families back home rely on such remittances for survival.

About AED45.1bn ($12.3bn) was sent out of the UAE in the form of remittances in 2012, up from AED41.2bn in 2011, according to the UAE Central Bank.

Some finance industry experts have said a tax on remittances could make the UAE less attractive for foreign workers, which are relied on in most industries.

However, the UAE also is among several Gulf states working to increase their local employment.

The Consultant 6 years ago

Oh dear....where to begin with this one?

The most obvious point is that they don't spend a lot of money in the local economy because they don't get paid enough to enjoy life and feed their families back home.

More fundamental though, is the flawed idea of "contributing minimally to the economy". The fact is that low-paid workers contribute tremendously - without people willing to work for a pittance, none of the magnificent buildings you see around Dubai would exist, as they would not be economically viable. The municipality employs an army of labourers, if they were paid more the cost of basic services would be astronomical. Shop assistants etc etc. The cost of their food and accomodation goes into the economy - does it really matter if this is done by the employer directly?

There would likely also be unforseen consequences, with people taking their savings in cash when the go home, reverting to informal hawala transfers and/or demanding pay rises to cover the cost of remittance.

Susan 6 years ago

That is the LAST thing UAE want to do. If they do that then many expats may leave the country and move to the neighboring GCC countries for better jobs.

Kpan 6 years ago

Im paying for Visa, medical, emirates ID, Toll, traffic fines and apart from these TAX good thinking :(

Geko 6 years ago

Possibly, he starts to think in the wrong time when Qatar needs that to happen. All these years, the experties and resources developed will be gifted out to other countries. Double shot on own foot. You loose your core asset and gift that out to strengthen your competitor. Good thinking keep it up... no wonder we hear so many failures recent days... Even we hear Qatar actively runs through them....

Geko 6 years ago

Possibly, he starts to think in the wrong time when Qatar needs that to happen. All these years, the experties and resources developed will be gifted out to other countries. Double shot on own foot. You loose your core asset and gift that out to strengthen your competitor. Good thinking keep it up... no wonder we hear so many failures recent days...

Matt 6 years ago

This is a sure-fire way of ensuring that a LOT of funds will be sent out of the UAE within the next few days. Sent mine already.

justsayin 6 years ago

Oh dear, Tobin and his Currency Transaction Tax rears its head again.
VAT is also being talked about too as we know.

Then we have all the rest of the fees and service charges that we pay all the time anyway.

peter peter 6 years ago

Is this for real ? Is Mr. Buamim really talking about expats " ..who contribute minimally to the economy.."? And who may they be? The people who toil endless hours for a pittance? The very same who converted a desert in to a paradise with their sweat and blood? Minimal contribution - really Mr. Buamim ? Shame !

Why does the government not considering taxing the "Fat Cats" like the banks who make millions and billions of Dirhams of profit annually, often with very sharp practices?

As an SME I am barely surviving in a depressed economy with a lot of unfair competition due to badly regulated rules of business. There are a hundred things for the Chamber of Commerce to do before talking of measures that would hurt the most vulnerable sector - the low paid laborers from the third world countries who probably contribute more than 80% of the money being repatriated.

No matter what laws you make Mr. Buamim, the rich and educated will find a way around them, only the poor will suffer!

James 6 years ago

It would be better if a government backed pension scheme is introduced and the fund is invested in government securities/equity.As of now the gratuity funds working capital of a company and in many instances the employees don't even receive it.Government should be the custodian of these funds and deploy it for country's benefit.Why introduce a tax for the sake if it--when there are other ways to park the funds.

Elia 6 years ago

They want Expats to work for them, since they cannot, they're not up to it... and in return they want these same Expats to pay for them remittance fees as claimed taxes!!!
Why don't you work and earn your own money, instead of charging taxes on Expats?! You're already charging high housing rental fees, small taxes here and there, and now you're putting your eyes on the remittances! It's not your business what the Expats do with their money, they earned it... They have the freedom to invest it wherever they wish
UAE has already become a hard place to make savings and send it back home... now you're just making it harder, Thank you for that, I hope you're happy now...