Will personal income tax in Oman prompt other GCC states to follow suit?

Published: 8 July 2024

NT Bureau / Agencies
DOHA

Oman’s decision to push forward with a personal income tax could provide a template for other GCC countries and encourage them to consider similar tax reforms, tax experts said, according to the UAE daily The National.

Oman’s Shura Council a few days ago moved the draft law on personal income tax to the State Council, Oman News Agency reported.

If passed, personal income tax will be a first in the GCC region and could affect high-earning foreign workers and wealthy Omani citizens, the report says.

“The likelihood of the legislation being enacted is high. The Council of State would normally only make technical comments on the legislation,” Thomas Vanhee, founding partner of boutique tax advisory services firm Aurifer, told The National.

The proposed tax targets high-income earners, with citizens taxed on net global income above $1 million and expatriates on Oman-sourced income above $100,000.

The expected reported tax rates range between 5 per cent and 9 per cent for foreign nationals, with a flat rate of 5 per cent for Omanis above the specified amount.

The levy is expected to be outlined in 2024 and then scheduled to be introduced in January 2025, according to reports.

The initial draft bill was introduced in 2022, proposing a tax framework aimed at high earners.
The potential introduction of personal income tax in Oman is meant to diversify revenue streams and reduce dependency on oil revenue.

It will remain to be seen whether the roll-out of income tax in Oman will be followed by other Gulf countries.

Countries such as the UAE and Saudi Arabia have previously strongly indicated that they have no plans yet to impose personal income tax as they seek to attract more international companies and talent.
“There are occasional rumblings on tax reform in other GCC countries due to proposals of members of parliament, which usually do not end up materialising, and occasionally remittance taxes are put on the table,” an expert said.