Thursday, August 11, 2022

Remittance Tax for UAE Migrant Workers?

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Amid concerns of declining oil revenues, a member of the United Arab Emirates Federal National Council on Tuesday proposed that the country impose taxes on billions of dirhams worth of remittances sent out by foreign workers to their home countries.

In a release by Gulf News, Ali Jasem, a member of the House from Umm Al Quwain sought for “more creative measures” to bolster the country’s revenues, “including a tax on remittance of the billions of dirhams which foreign workers send back to their home countries every year.”

This developed as 2012 and 2013 audit reports were being debated.

Sought for comment, Obaid Humaid Al Tayer, Minister of State for Financial Affairs, told Gulf News that the proposal was a personal view of a member of the House. He assured that “the Government may not comment on issues of such significance before they are throughly studied in terms of their socioeconomic impacts.”

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But the proposal reflect a growing concern in the UAE that oil revenue is declining and that the country may have become too dependent on foreign workers.

About 80 per cent of the population — about 8 million — in the UAE is composed of foreigners employed as white- and blue-collar workers and their dependents. Most of them fill almost all strenuous and low-paying jobs in industries such as construction and services sector. They sent AED45.1 billion out of the country last year, up from AED41.2 billion the previous year, according to data from the central bank.

uae savings

Jasem proposes developing a collection system so this source of revenue are properly levied by appropriate federal authorities.

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But a House member from Dubai, Hamad Al Rahoumi, said remittances are key for foreigners in the UAE, noting that many of them came to the country with families to support back home. The introduction of remittance levies could adversely impact the attractiveness of the country for migrant workers.

“So I do not think any such levies will be imposed without in-depth studies of their immediate and long-term impact,” he said.

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