Shura Council Rejects Remittance Tax Proposal
Bahrain’s Shura Council rejected the two percent tax proposal on expatriate remittances. Lawmakers raised concerns about the potential harm to the nation’s economy. Khalid Al Maskati, Chairman of the Financial and Economic Affairs Committee, warned that the tax could promote illegal activities like money laundering.
Economic Impact and Concerns Raised
Al Maskati explained that the tax would discourage the use of official remittance channels. Instead, people would likely turn to black-market systems and unauthorized cryptocurrencies. He described the tax as a “disastrous” plan for Bahrain’s financial system.
Parliament’s Position and Future Voting
Despite the Shura Council’s objections, Parliament had approved the bill. The tax proposal remains in limbo until a joint vote between the National Assembly and the Shura Council occurs. Such votes have not taken place since 2002, so the decision could be delayed until the 2026 elections.
International Agreements at Risk
Al Maskati also pointed out that the proposed tax violated Bahrain’s international agreements, especially the Unified Arab Investment Agreement. The agreement prohibits financial restrictions on Arab capital, and the tax would breach this commitment. He warned that approving the tax would harm Bahrain’s efforts to attract foreign investments.
Disadvantages of the Proposed Tax
Committee members, including Sadiq Al Rahma, criticized the tax for its minimal revenue potential. Al Rahma argued that the tax would have a low yield while causing significant damage to the economy. The proposal could drive expatriates to illegal remittance channels, increasing the risks to Bahrain’s financial system.
Expatriates and Illegal Alternatives
Expatriates earning less than BD200 per month would likely turn to informal channels if the tax were imposed. This shift could increase fraud and financial crime. Ali Al Aradi questioned why the bill was introduced without a thorough study of its effects.
Ministry of Finance’s Opposition
The Finance and National Economy Ministry also opposed the proposed tax. Ministry officials argued that the tax would violate the principle of free money transfer. They warned that it could negatively impact Bahrain’s economy and create illegal remittance channels.
Looking Toward the Future
The proposal will likely remain unresolved until new members are elected in 2026. Bahrain’s commitment to a secure and competitive financial environment remains strong as it continues to shape its policies.
