Oman to impose income tax on top earners, becomes first Gulf state to do so. Details here
Sultanate of Oman's Minister of Economy, Said bin Mohammed Al-Saqri, highlighted the need for the nation to diversify its public revenues to reduce reliance on oil income while maintaining the social spending levels.
The government has decided to impose a 5 per cent income tax on people of the nation who have an annual income of 42,000 rials ($109,000) or above, according to the agency report. However, this will not be in effect until 2028, as per a local media outlet.
The Ministry also said that this move will mean that the top 1 per cent of the economy's earners will have to pay tax in Oman, as per the report.
According to the news agency's report, no other Middle Eastern Gulf country that is part of the Gulf Cooperation Council (GCC) has income tax on its citizens.
Nations like Saudi Arabia, the United Arab Emirates, and Qatar, apart from earning high revenues from oil exports, also earn from foreign workers. Oman's move to impose an income tax on its citizens is expected to be closely monitored by the neighbouring Middle Eastern nations.
'Oman is looking to progress with fiscal reforms while still remaining competitive. This is especially at a time when high-net-worth individuals are moving to the region,' Monica Malik, the chief economist at Abu Dhabi Commercial Bank, told the news agency. 'While the scope is narrow, it will still be a significant fiscal development in the region.'
Saudi Arabia and Bahrain are the two outliers who are expected to have fiscal deficits this year, compared to other GCC nations, which are likely to have solid fiscal balances, according to the agency report.
The report also cited the International Monetary Fund (IMF), which said that Gulf nations will eventually need to impose some taxes to diversify their revenues in case the demand for oil drops in the future.
The Sultanate has raised funds for the government through a $2 billion initial public offering of its state energy company's exploration and production unit in 2024, as the nation looks for other sources of income for the economy.
Oman's income tax 'could act as a catalyst to other GCC countries implementing the tax as well in the future,' Malik told the news agency.
According to the OEC data, Oman exported crude oil worth $29.3 billion in the year 2023, with its top importer being China. This export data marks the Gulf nation as the 15th largest crude petroleum exporter in the world.
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