Oman taxing the richest: 'It will be interesting to see if Muscat starts a trend'
"In France, we don't have oil but we have ideas," was a refrain during the first oil crisis in 1973. It is likely that at the same time, in the Gulf monarchies, people were saying: We have oil, it pollutes, but we don't have income tax. There was no need to tax residents when hydrocarbon revenues filled the state coffers. But times have become tough for everyone. Even Oman has had to come to terms with taxing the wealthiest, becoming the first oil-rich country to take that step.
In a royal decree published Sunday, June 22, Sultan Haitham bin Tariq ratified the introduction of a 5% income tax starting in 2028 on Omanis earning more than 42,000 Omani rials (€94,400) per year. Deductions will apply for expenses related to primary residence, health, or charitable donations. According to the sultanate's estimates, 99% of the population will not be affected by the new tax. Turning on the tax tap was seen as necessary to reduce the country's extreme dependence on oil revenues. Fossil fuels account for 85% of the Omani state's income, compared to an average of 60% for the region.
Diversifying the economy
The sustained drop in global crude oil prices – below $68 (€58.65) for North Sea Brent crude on Tuesday, amid hopes for a possible resolution of the Israel-Iran conflict – has weakened Gulf economies. "The average fiscal breakeven price for countries in the region (the oil price required to balance their budgets) has continued to rise in recent years. In 2024, it reached $83.20, an increase of $10 compared to 2020," said Stéphane Alby, economist at BNP Paribas, in a recent study. As a result, "from a situation of near balance in 2023-2024, the combined budget balance of the Gulf countries will slip into deficit, with a shortfall expected to exceed 3% of GDP [gross domestic product] in 2025-2026."
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LeMonde
8 hours ago
- LeMonde
Oman taxing the richest: 'It will be interesting to see if Muscat starts a trend'
"In France, we don't have oil but we have ideas," was a refrain during the first oil crisis in 1973. It is likely that at the same time, in the Gulf monarchies, people were saying: We have oil, it pollutes, but we don't have income tax. There was no need to tax residents when hydrocarbon revenues filled the state coffers. But times have become tough for everyone. Even Oman has had to come to terms with taxing the wealthiest, becoming the first oil-rich country to take that step. In a royal decree published Sunday, June 22, Sultan Haitham bin Tariq ratified the introduction of a 5% income tax starting in 2028 on Omanis earning more than 42,000 Omani rials (€94,400) per year. Deductions will apply for expenses related to primary residence, health, or charitable donations. According to the sultanate's estimates, 99% of the population will not be affected by the new tax. Turning on the tax tap was seen as necessary to reduce the country's extreme dependence on oil revenues. Fossil fuels account for 85% of the Omani state's income, compared to an average of 60% for the region. Diversifying the economy The sustained drop in global crude oil prices – below $68 (€58.65) for North Sea Brent crude on Tuesday, amid hopes for a possible resolution of the Israel-Iran conflict – has weakened Gulf economies. "The average fiscal breakeven price for countries in the region (the oil price required to balance their budgets) has continued to rise in recent years. In 2024, it reached $83.20, an increase of $10 compared to 2020," said Stéphane Alby, economist at BNP Paribas, in a recent study. As a result, "from a situation of near balance in 2023-2024, the combined budget balance of the Gulf countries will slip into deficit, with a shortfall expected to exceed 3% of GDP [gross domestic product] in 2025-2026."
France 24
12 hours ago
- France 24
Oil prices drop as Israel agrees to ceasefire proposal
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France 24
15 hours ago
- France 24
World facing 'most complex' situation in decades: WEF
"It is the most complex geopolitical and geo-economic backdrop we've seen in decades," WEF President and CEO Borge Brende said ahead of a meeting of the multilateral forum in the northern Chinese city of Tianjin. "If we are not able to revive growth again, we can unfortunately see a decade of lower growth," he warned. Officials including Singaporean Prime Minister Lawrence Wong will attend this week's WEF meeting in the port city of Tianjin -- known colloquially as the "Summer Davos". The meeting comes hard on the heels of the United States' involvement in the Iran-Israel conflict and follows months in which the global economy has been battered by a tariff war launched by US President Donald Trump. This month, the World Bank cut its forecast for global growth this year from 2.7 percent to 2.3 percent, following a similar reduction by the International Monetary Fund. Brende told AFP it was still too soon to predict the impact of Trump's swingeing tariffs. It is "too early to say what these tariffs will end with because the negotiations are still ongoing", he said. "I think the jury is still out, but the traditional globalisation we saw is now changed into a different system," he said. "That is a new chapter... especially since trade was the engine of growth." Brende also warned mounting conflict could have a "very negative impact" on global growth. 'China matters' The WEF gathering in Tianjin comes at an uncertain juncture for the Chinese economy, which has struggled under a years-long property sector crisis and sluggish domestic spending. "China really does matter," Brende said, adding he expects the country to account for almost 30 percent of global growth this year. "China is pivoting its economy more towards digital trade, towards services and also now opening up for increasing domestic consumption -- something that is important," Brende said. Officials in Beijing have since late last year unveiled a string of aggressive measures including key rate cuts and cancellations of home purchasing restrictions. But many economists remain sceptical that the Chinese economy can achieve the government's official growth target for this year of around five percent. With the tumultuous trade war threatening shipments from the manufacturing powerhouse, Beijing is looking to emerging technologies such as artificial intelligence as potential sources of future growth. "In the past, trade was the driver of growth, but you cannot exclude that new technologies including AI can... maybe replace the important role that trade had", Brende told AFP. While trade will remain "very important", he said, disruptive technologies can provide the productivity boost needed to "avoid a decade of sluggish growth". Attendees bustled around a cavernous conference hall in Tianjin on Tuesday ahead of talks with a lineup of speakers that includes former UK Prime Minister Tony Blair. Chinese Premier Li Qiang is expected to deliver a keynote speech on Wednesday. © 2025 AFP
