Taxing Remittances: Consequences for Migrant Labour Populations in the GCC Countries (Froilan Tuccat Malit, George S. Naufal, Gulf Research Center)

As the world’s oil and gas prices decline, taxation of foreign workers’ remittances has increasingly become a potentially viable solution to address government budget deficits in the Gulf Cooperation Council (GCC) states. With growing unemployment rates and labour shortages among local populations, the GCC governments have recently proposed legislative and, in some cases already introduced, economic measures to tax foreign workers’ remittances. Newly proposed tax measures on remittance outflows are often rationalised as critical stop-gap solutions to mitigate high government budget deficits and share costs in accessing state-subsidized public infrastructure and services. Yet, several GCC governments face a complex policy dilemma between balancing budget deficits and addressing high labour shortages and incentives in local labour markets. Thus, the key policy question is: how can GCC governments manage this emerging policy dilemma within their borders? This policy brief examines not only the recently suggested policy responses of various GCC governments but also their long-term potential implications on national labour markets and migrants and their families both in the destination and origin countries

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