Bahrain MPs unanimously vote on 2% tax on expat remittances

BAHRAIN : The proposal, aimed at boosting non-oil revenue and encouraging local spending, now faces its biggest hurdle: a second review by the Shura Council, which previously rejected it.

If the council blocks the tax again, the matter will head to a joint National Assembly session for a final vote.

MPs backing the remittance tax argue it would generate revenue for the country and reduce capital outflow. Parliament’s financial and economic affairs committee chairman Ahmed Al Salloom emphasized that millions of dinars are sent abroad, and the tax could help Bahrain retain more funds within its economy.
Committee rapporteur Zainab Abdulamir echoed this sentiment, pointing out that remittances have grown substantially, warranting government intervention.

However, the proposal faces stiff resistance from financial experts and the Shura Council’s financial and economic affairs committee. Chairman Khalid Al Maskati warned that the negatives outweigh the benefits, calling the tax impractical and financially damaging.

Al Maskati and other opponents argue that the tax could push low-income expatriates—72% of whom earn less than BD200 per month—toward illegal money transfer channels, increasing risks of money laundering and black-market transactions.

Officials from the Finance and National Economy Ministry also warned that the levy contradicts international agreements protecting the free movement of capital. They highlighted that similar taxes elsewhere have fueled underground financial networks, complicating regulation.

The Central Bank of Bahrain, Bahrain Chamber, and the Bahrain Association of Banks have also voiced strong opposition, fearing that the tax could discourage foreign talent, disrupt banking operations, and deter global investors.