Parliament Speaker Ahmed Al Musallam presided over the vote. After the bill was passed, the Speaker left it for the consideration of the Shura Council. The government is bound by law to prepare legislation introduced by Parliament within six months.
The government’s stand was that taxing remittances was unfair and unconstitutional. In a written reply to MPs, the government said the levy was against the fundamental principles of freedom of movement of money. The government has also informed that the country is committed to complying with the many international agreements and treaties that Bahrain has signed with countries around the world on the transfer of money.
This will cause expatriates in leadership positions in companies and banks in Bahrain to move to other countries. The government also pointed out that taxes are not paid by workers and sponsors are forced to pay. The Bahrain Chamber and the Bahrain Business Men’s Association have expressed opposition to the new bill.
The government had also pointed out that the imposition of tax would lead to remittances through illegal channels. But the legislative proposal containing the tax structure was submitted by the MPs with the support of many members.
Initially, it was recommended that expatriate remittances of less than 200 Bahraini dinars (approximately 44,000 Indian rupees) should be taxed at one percent, between 201 dinars and 400 dinars (about 88,000 Indian rupees), two percent and above 400 dinars, and three percent of the remittances.
It is suggested that levy should be levied at the time of sending money by non-residents through authorized financial institutions. This amount is collected by the Bahrain National Bureau of Revenue from banks and money transfer institutions. Earlier there was a demand to implement the tax recommendation by granting exemptions to transactions like investment protection, capital transfer and other transactions that are exempted under the tax law of Bahrain, but the details of the new draft bill have not been released.
It is estimated that about five lakh expatriates in Bahrain send about 100 crore dinars to their own country in a year. Proponents of the bill argue that the new law will encourage a significant amount of investment to be made in Bahrain itself.