Oman is set to become the first country in the Gulf Cooperation Council (GCC) to introduce personal income tax. The draft law for this tax has been approved by the kingdom’s Shura Council and is expected to be finalized by 2025. Analysts speculate that other GCC countries may follow Oman’s lead in the future, using it as a template for introducing personal income tax. The UAE, however, has confirmed that it has no plans to introduce personal income tax at this time, opting instead to focus on other forms of taxation such as corporate income tax.
According to reports, the new personal income tax in Oman will not affect the majority of expatriates and nationals. Foreign nationals earning over $100,000 in Oman will be subject to a 5-9% personal income tax, while Omani citizens with a net global income over $1 million will also be taxed at 5%. The introduction of personal income tax in Oman is seen as a move to expand the country’s tax base, following the implementation of corporate income tax in 2009.
There are approximately 2.2 million expatriates in Oman, making up 42.3% of the total population. Most of these expatriates have an educational level below a general diploma, with only a small percentage having a bachelor’s degree or higher. This suggests that the number of foreign workers earning over $100,000 and liable to personal income tax may be lower than anticipated. Similarly, the number of Omani citizens meeting the $1 million income threshold for taxation is expected to be minimal.
The introduction of personal income tax in Oman is expected to have a limited impact initially on the population, both expatriates and citizens. The country’s move towards diversifying its revenue sources away from petrodollars aligns with global financial institutions’ recommendations for GCC countries to introduce new taxes. Oman’s decision to implement personal income tax sets it apart as a pioneering member of the GCC in expanding its tax base and increasing revenue streams.
As the timeline for introducing personal income tax in Oman approaches, it is crucial for individuals and businesses in the country to stay informed about the developments and implications of this new taxation system. While the introduction of personal income tax may not have a significant immediate impact on the majority of residents in Oman, it signals a broader shift towards a more diversified and sustainable economic model for the country. Oman’s willingness to lead in this area may serve as a model for other GCC countries considering similar tax reforms in the future.
