Proposal to impose fees on expat remittances rejected

Manama : A proposal to impose a fee on foreign remittances has been rejected as it contradicts with the Kingdom’s constitution.

The proposal was collectively rejected by the Legislative and Legal Affairs Committee and the Economic and Financial Affairs Committee in the Council of Representatives, in addition to the Central Bank of Bahrain (CBB), Bahrain Chamber of Commerce and Industry (BCCI) and Bahrain Bankers Society.

A number of MPs have submitted different proposals serving the same purpose in the past three years, but they were all rejected by the council. 

The latest was submitted by MP Jamal Dawood, who rephrased the proposals of his fellow MPs and demanded to impose a fee on foreign remittances according to the amounts transferred, dividing them upon two categories, below and above BD300.

Dawood said the proposal would encourage citizens and residents to spend and invest in the Kingdom of Bahrain and enhance supervision on the amounts being transferred abroad.

The Economic and Financial Affairs Committee in the council was tasked to study the proposal and review it with the concerned authorities. The committee rejected the proposal, describing it as “unconstitutional”.

Committee members, headed by MP Abdulrahman Buali, recently asserted that the proposal restricts financial transactions and the flow of capitals, adding that it may create illegal channels for money transferring and may push investors out of Bahrain.

Additionally, CBB informed the committee that the proposal, if implemented, would have a negative impact on foreign banks and the official exchange rates.

BCCI mentioned similar reasons to reject the proposal and added that it contradicts with the Kingdom’s commitments in combatting money laundering and financing terrorism. 

The Chamber also mentioned that the move would harm expats and damage the kingdom’s free economy policies and reputation.

As for Bahrain Bankers Society, it rejected the proposal for several reasons that included forming an additional burden on low-income expats, the limited outcomes expected from implementing it and contradicting with the unified GCC policies.

Dawood earlier explained to DT News that the proposal stipulates imposing BD1 fees on remittances below BD300 and BD10 for all money transfers exceeding the amount of BD300. 

Dawood assured that the proposal would annually generate at least BD90 million that could empower the State budget.

A similar proposal, submitted by MP Mohammed Al Ahmed, was passed by the council in 2016, despite several reservations from some MPs and the CBB.

The previous proposal stipulated charging 0.5 to one percent of each remittance made from Bahrain. However, it reached nowhere as the second branch of the Legislative Authority, Shura Council, rejected it.

Recent statistics showed that around BD2.5 billion is annually transferred from Bahrain by expatriate workers. This means, if MP Dawood’s proposal is implemented, the minimum amount that would be generated will be BD2.5 billion.

The committee’s decision would be reviewed by the council, in the presence of government representatives, in its upcoming weekly meeting on Tuesday.