Manama: Expatriates should pay a tax of up to five per cent on remittances from Kuwait, a lawmaker has said.

MP Faysal Al Kandari said that the tax would make a new source of revenue for the state as it is dealing with the financial consequences of the downfall in the price of oil.

Under the proposal, expatriates will pay two per cent on any remittance of less than KD100. However, the tax goes up to four per cent on remittances between KD100 and KD499, and to five per cent on remittances that exceed KD500, Kuwaiti daily Al Rai reported on Monday.

The tax money could be collected through fiscal stamps to be issued by the finance ministry, he said.

All money orders and cheques must be sent by the accredited banks and money exchanges to the finance ministry for scrutiny and control.

Those who break the law in any way, including sending money in a non-regular way, will be sent to jail for up to six months or made to pay a fine of up to KD10,000, Al Kandari said in his proposal.

The lawmaker said the new tax would provide the state with an additional source of revenue of at least KD20 million annually.

He based his calculations on the premise that the minimum annual remittance figures in Kuwait were KD2 billion.

Al Kandari said that “imposing the remittance tax in a fair and just way would help the state improve the standards of services.”

In June last year, MP Kamel Al Awadhi submitted a similar proposal and argued that the fees to be collected would contribute towards the highly subsidised services foreigners receive from the state.

However, the proposal was rejected by the parliament’s legislative committee.

Around two thirds of the 3.3 million people living in Kuwait are foreigners, mainly non-skilled workers in the construction and service sectors.

Indians make up the largest community whereas Egyptians constitute the largest Arab community in the northern Arabian Gulf state.