Expats living and working in the United Arab Emirates could have a tax imposed on any money sent to their country of origin under new government proposals.
According to the president of the Dubai Chamber of Commerce and Industry, Hamad Buamim, the UAE government is currently seeking feedback from banks and other financial institutions on plans to tax remittances.
The UAE’s immigrant population makes up around 80 per cent of the country’s total residents and it is estimated that workers sent a net AED45.1 billion (US$12.3 billion) abroad last year – an increase from AED41.2bn a year earlier.
However, most financial experts in the country are not confident that such a tax will be implemented. “This looks like a preliminary discussion that I would not expect to lead to policy action,” Simon Williams, the chief Middle East economist at HSBC Holdings Plc (HSBA) in Dubai, said in an e-mail to Bloomberg. “Implementation would be extraordinarily difficult, and would likely offer only very limited returns.”
Even Buamim believes that expatriates in the UAE would continue to send money home even if the tax is imposed. “I don’t think it will really impact the remittance business [but] it will impact the consumer, no doubt about that,” he said.