Oman might be the First GCC Country to impose Personal Income Tax

Oman is set to break new ground within the GCC by considering the implementation of a personal income tax targeting high-earning individuals, both citizens and expatriates. Currently, no personal income tax law is enacted in Oman.

This potential move, long under discussion by the government and now advanced to the State Council for deliberation, marks a significant departure within the region. The initiative aligns with Oman's strategic goals of economic diversification and reducing reliance on oil revenues.

The Shura Council in the Sultanate of Oman has presented a draft income tax law to the State Council. Initially proposed in 2022, the draft income tax law aims to impose taxes on high-income earners.

Under Draft Law, Foreign nationals could face tax rates ranging from 5% to 9%, while Omani citizens would likely be subject to a flat 5% rate. Notably, this stands in contrast to neighbouring countries like the UAE and Saudi Arabia, which have traditionally refrained from individual taxation to bolster their attractiveness to global businesses and skilled professionals.

Residents will be subject to income tax if their annual income exceeds $100,000, while citizens will be taxed if their net income surpasses $1 million.

By the end of April this year, Oman had achieved a budget surplus of 147 million Omani riyals. General state revenues amounted to 3.744 billion Omani riyals, a 15% decrease year-on-year, while public expenditure also fell by 7% year-on-year to approximately 3.6 billion Omani riyals.

Oman's potential introduction of personal income tax reflects a broader regional shift towards sustainable economic models and diversified revenue streams.

If enacted, this policy could show us a first-hand result of the leadership of Oman within the GCC in exploring innovative fiscal strategies amid evolving global economic dynamics.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates