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UAE may soon impose tax on remittances

Expat remittance may soon be taxed

Expats sent AED45.1 billion out of country last year.

September 29, 2013 11:40 by



The UAE is considering whether to impose a tax on the money that expatriates transfer to their home countries every year, government and banking sources said on Friday.

A circular discussing the proposal and requesting feedback was sent to certain banks and financial institutions in the country, the sources said, speaking to Reuters on condition of anonymity, because of the sensitivity of the subject.

“It is a pilot project and is in the initial stages. Based on the feedback from banks and others, a decision will be taken,” says a Ministry of Finance source.

According to news reports, this proposal reflects growing concern that Gulf countries are becoming too dependent on foreign workers and are losing a majority of their wealth, in the form of remittances abroad.

Expat employees in the UAE transferred a net total of AED45.1 billion out of the country last year, up from AED41.2 billion in 2011, according to central bank data.

Would expats stay in the UAE?

Most people become expats due to financial concerns, so there is no doubt this decision would have an effect on the attractiveness of the country – but will it be enough to drive them away?

After all, there is no income tax in the country and that still remains a major attraction for foreigners living and working here.

Whether or not expats would continue to live and work in the UAE after such a tax is imposed is, at this point, a difficult question to answer.

It would largely depend on the nature of the tax and how much money expats would ultimately have to give up.

How do you feel about this proposal and would it change your plans of living and working in the UAE? You can participate on the poll on Kippreport’s front page.



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3 Comments

  1. chaz on September 29, 2013 1:19 pm

    ye tone more “none tax” coming our way.

    Might be easier for the concerned to bring in taxes on income after all.

     
  2. Umer on September 30, 2013 3:35 pm

    Imposing a tax on sending remittances is so absurd. Are these workers/expats are working for the local sheikhs. I believe no. First of all the kafalah system is wrong which in Islam is Haram under my observation. Companies here are paying too much already to the locals kafeel. So many other expenses. If UAE government is thinking about implementing this policy. Then entire system should ne changed. There should be no sponsorship system, companies should have full rights and 100% stakes. Government can put some restrictions. Salaries should be paid more. What if a person is earning here 500 AED/month imagine how much he will save and how much he will pay for tax. Workers, labors are earning very low salaries. There are some charges on if amount is less then 100USD. You keep some sense. Also please don’t consider my comments against any national interest. People working here in UAE are just because of may be tax free country, but one reason is peace. Peace is the only thing in this country expats enjoyed. Under my observation people will not follow this in any case or they will leave the country.

     
  3. Ajit on October 9, 2013 4:54 pm

    Definitely my plan of staying in Dubai will change if such rules gets apply in this country.
    Already expats are paying huge amount for accommodation, parking, monthly housing fee etc. which is indirect means of taking taxes from expats. Now top of this if such a tax comes then many will think to go back atleast i will.

     

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