Latest news with #DavidDaly
The National
09-07-2025
- Business
- The National
What does Oman's new income tax mean for the Gulf?
The absence of income tax has helped to attract people from around the world to move to the Gulf. But one country is set to change direction. Oman recently announced it will be the first country in the region to introduce personal income tax. While some countries, including the UAE and Saudi Arabia, have other types of taxes, such as VAT, on most goods and services, Oman is making history with a levy on personal income. The tax is not set to take effect until 2028, but it has already raised questions about whether other Gulf states will follow suit. Deepthi Nair, Assistant Business Editor, discusses the subject with David Daly, a partner at the Gulf Tax Accounting Group in the UAE.
The National
23-06-2025
- Business
- The National
Oman to impose Gulf's first income tax on high earners to 'help economic goals'
Oman's move to introduce personal income tax from 2028 is a significant milestone in the sultanate's push to achieve its economic diversification goals, although the tax ratio remains low to reduce burden on the population, analysts have said. On Sunday, Oman issued the Personal Income Tax Law through royal decree, which imposes a 5 per cent tax on annual income exceeding 42,000 Omani rials ($109,236), Oman News Agency said, citing the country's tax authority. The law, which will come into effect at the beginning of 2028, will levy tax on income derived from 'specific income types as defined by the law', the news agency said. The Tax Authority said that the new law was in line with Oman's economic and social conditions and contributes to the objectives of Oman Vision 2040 to cut reliance on revenue generated from the sale of hydrocarbons. 'The introduction of income tax is another signal that a country has achieved a mature economic position,' David Daly, partner at Gulf Tax Accounting Group, told The National. 'That the rate is competitive internationally will ensure that Oman remains a country of choice for international professionals.' Careful study Oman, which has been in the process of drafting the personal income tax framework since 2022, said the move to finally implement the tax law follows an in-depth study that assessed the economic and social impact, based on income data from a number of government entities. The study has established a 'carefully considered exemption threshold', which means 99 per cent of Oman's population will not be taxed. 'The law is a precedent, setting Oman as the first GCC country to impose income taxes on its citizens,' EFG Hermes analyst Mohamed Abu Basha said in a research note on Monday. 'In that sense, while partially symbolic in nature – given the limited base of citizens to be impacted by the law (only 1 per cent of the population as per official estimates) – the move is still significant, considering the precedent it sets.' The law not only sets a higher personal income threshold and a low tax ratio, it also includes deductions and exemptions accounting for social considerations in the sultanate, such as education, health care, inheritance, zakat, donations, primary housing and other factors, according to the ONA report. Oman's plans to levy income tax on high earners was first mentioned in a bond prospectus published by the Finance Ministry in 2020 when the sultanate raised $2 billion in external financing. At the drafting stage, the expected reported tax rates ranged between 5 per cent and 9 per cent for foreign nationals, with a flat rate of 5 per cent for Omanis. ONA on Sunday did not disclose details on whether there are separate tax brackets for expatriates and Omani nationals. Oman, like its peers in the Gulf, is trying to diversify its economy away from oil. Tourism and agriculture are among sources of economic activity outside of the oil and gas sector, which accounts for about 70 per cent of the government revenue. Under its economic and social reforms programme, the sultanate aims to reduce its dependence on oil income by 15 per of its gross domestic product by 2030 and further reduce it by 18 per cent by 2040. Oman's economy is set to expand at a faster pace over the medium term, with overall GDP growth projected at 2.4 per cent in 2025 and 3.7 per cent in 2026, according to the International Monetary Fund. The country's real GDP strengthened to 1.7 per cent in 2024, an increase from 1.2 per cent in 2023, boosted by robust non-hydrocarbon activity, notably in manufacturing and services sectors of the sultanate, the IMF said earlier this month. Systems in place Oman on Sunday said the new tax not only aims to promote wealth redistribution among societal segments, it will also support 'the state budget, and specifically, financing part of the social protection system'. 'Given the tax-free allowance and structure of the Omani economy, I don't see any material economic impact in the near to medium term. Indeed, it should allow for government investment in their society to the benefit of all,' Mr Daly said. When implemented, personal income tax will be a first in the Gulf region and is likely impact only the high-earning foreign workers and wealthy Omani citizens. All necessary preparations and requirements for implementing the tax have been completed, said Karima Al Saadi, director of the Personal Income Tax Project at the Tax Authority. 'The executive regulations of the law will be issued within one year of its publication in the Official Gazette,' she added. An electronic system has been developed by the Tax Authority to promote voluntary compliance and has been linked with the departments concerned to ensure accurate income calculation and verification of tax declarations, she told the news agency. 'Guidance manuals for natural and legal persons will be published according to a predetermined schedule,' she said.
The National
23-06-2025
- Business
- The National
Oman's personal income tax starting 2028 'to help achieve economic goals'
Oman's move to introduce personal income tax from 2028 is a significant milestone in the sultanate's push to achieve its economic diversification goals, although the tax ratio remains low to reduce burden on the population, analysts have said. On Sunday, Oman issued the Personal Income Tax Law through royal decree, which imposes a 5 per cent tax on annual income exceeding 42,000 Omani rials ($109,236), Oman News Agency said, citing the country's tax authority. The law, which will come into effect at the beginning of 2028, will levy tax on income derived from 'specific income types as defined by the law', the news agency said. The Tax Authority said that the new law was in line with Oman's economic and social conditions and contributes to the objectives of Oman Vision 2040 to cut reliance on revenue generated from the sale of hydrocarbons. 'The introduction of income tax is another signal that a country has achieved a mature economic position,' David Daly, partner at Gulf Tax Accounting Group, told The National. 'That the rate is competitive internationally will ensure that Oman remains a country of choice for international professionals.' Careful study Oman, which has been in the process of drafting the personal income tax framework since 2022, said the move to finally implement the tax law follows an in-depth study that assessed the economic and social impact, based on income data from a number of government entities. The study has established a 'carefully considered exemption threshold', which means 99 per cent of Oman's population will not be taxed. 'The law is a precedent, setting Oman as the first GCC country to impose income taxes on its citizens,' EFG Hermes analyst Mohamed Abu Basha said in a research note on Monday. 'In that sense, while partially symbolic in nature – given the limited base of citizens to be impacted by the law (only 1 per cent of the population as per official estimates) – the move is still significant, considering the precedent it sets.' The law not only sets a higher personal income threshold and a low tax ratio, it also includes deductions and exemptions accounting for social considerations in the sultanate, such as education, health care, inheritance, zakat, donations, primary housing and other factors, according to the ONA report. Oman's plans to levy income tax on high earners was first mentioned in a bond prospectus published by the Finance Ministry in 2020 when the sultanate raised $2 billion in external financing. At the drafting stage, the expected reported tax rates ranged between 5 per cent and 9 per cent for foreign nationals, with a flat rate of 5 per cent for Omanis. ONA on Sunday did not disclose details on whether there are separate tax brackets for expatriates and Omani nationals. Oman, like its peers in the Gulf, is trying to diversify its economy away from oil. Tourism and agriculture are among sources of economic activity outside of the oil and gas sector, which accounts for about 70 per cent of the government revenue. Under its economic and social reforms programme, the sultanate aims to reduce its dependence on oil income by 15 per of its gross domestic product by 2030 and further reduce it by 18 per cent by 2040. Oman's economy is set to expand at a faster pace over the medium term, with overall GDP growth projected at 2.4 per cent in 2025 and 3.7 per cent in 2026, according to the International Monetary Fund. The country's real GDP strengthened to 1.7 per cent in 2024, an increase from 1.2 per cent in 2023, boosted by robust non-hydrocarbon activity, notably in manufacturing and services sectors of the sultanate, the IMF said earlier this month. Systems in place Oman on Sunday said the new tax not only aims to promote wealth redistribution among societal segments, it will also support 'the state budget, and specifically, financing part of the social protection system'. 'Given the tax-free allowance and structure of the Omani economy, I don't see any material economic impact in the near to medium term. Indeed, it should allow for government investment in their society to the benefit of all,' Mr Daly said. When implemented, personal income tax will be a first in the Gulf region and is likely impact only the high-earning foreign workers and wealthy Omani citizens. All necessary preparations and requirements for implementing the tax have been completed, said Karima Al Saadi, director of the Personal Income Tax Project at the Tax Authority. 'The executive regulations of the law will be issued within one year of its publication in the Official Gazette,' she added. An electronic system has been developed by the Tax Authority to promote voluntary compliance and has been linked with the departments concerned to ensure accurate income calculation and verification of tax declarations, she told the news agency. 'Guidance manuals for natural and legal persons will be published according to a predetermined schedule,' she said.
The National
07-04-2025
- Business
- The National
UAE issues corporate tax rules for foreign investors and entities
The UAE has announced rules that will make a non-resident or juridical entity liable to pay corporate tax in the country, as it seeks to remain competitive globally and ease the compliance burden for foreign investors. The Ministry of Finance issued Cabinet Resolution No 35 of 2025 determining the relationship of a non-resident person in the UAE for the purposes of Federal Decree-Law No 47 of 2022, regarding corporate and business tax. The new resolution defines the cases in which a non-resident legal person, who is an investor in a qualifying investment (QIF) fund or a real estate investment trust (Reit), has a link in the UAE and is, therefore, subject to tax. 'The resolution lays out the rules for when non-resident natural or juridical persons are taxable in the UAE,' said David Daly, a partner at the Gulf Tax Accounting Group in the UAE and a columnist for The National. 'The UAE is belatedly handing a three-edged sword to foreign investors. One side is the certainty of this Cabinet decision and general recognition of the requirement to raise tax revenue. The second is balancing that requirement against remaining internationally competitive in what today is an incredibly fluid global marketplace. 'The final side is the floating anchor. From what date does this law apply? If it's June 2023, when corporation tax launched, then the ship has sailed as decisions have long been made. If it's the date the law was issued, then good. There is time to review and reconsider. The bad? How many more of these decisions are coming? And covering what?' The UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent starting from the financial year beginning on or after June 1, 2023. It brought the income of companies exceeding Dh375,000 ($102,100) within the taxable bracket. Taxable profits below that level will be subject to a tax of 0 per cent. The Ministry of Finance also confirmed in 2023 that business owners in the country would be subject to corporate tax only if their turnover in a calendar year exceeds Dh1 million, ensuring that only business or business-related activity income is taxed. The new decision clarifies when a non-resident juridical investor in a QIF or Reit is considered to have a link in the UAE, thus becoming subject to taxation under Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses. This follows the earlier issuance of Cabinet Decision No 34 of 2025, which focused on QIFs and qualifying limited partnerships. Under the new decision, a link for a non-resident juridical investor in a QIF will arise under two circumstances. If the QIF distributes 80 per cent or more of its income within nine months from the end of its financial year, the link is established on the date of the dividend distribution. Alternatively, the link arises on the date the ownership interest is acquired if the QIF fails to distribute at least 80 per cent of its income within the same period. Additionally, a link will be created if the QIF fails to meet the diversity of ownership conditions during the tax period in which the failure occurs. For Reits, a similar rule applies. A link is established either on the date of the dividend distribution, if 80 per cent or more of income is distributed within nine months from the end of the financial year, or on the date of ownership acquisition if the Reit does not distribute at least 80 per cent of its income within the specified timeframe. Except in the above cases, a non-resident legal person investing in a QIF and/or Reit will no longer have a taxable presence in the UAE, the law stated. Dhruv Tanna, associate vice president at DIFC-based investment and wealth management firm PhillipCapital, said the decision provided 'much-needed clarity' to non-resident investors in QIFs and Reits regarding their potential tax exposure in the UAE under the corporate tax regime. 'By defining the circumstances in which a nexus is created, this decision distinguishes between passive, diversified investments and structures that either concentrate on UAE real estate or lack sufficient distribution or ownership diversity,' he said. 'Specifically, triggering events – such as failure to distribute 80 per cent of income within nine months or breaching diversity thresholds – serve as practical indicators of when a non-resident investor's involvement becomes sufficiently substantial to warrant tax treatment akin to a domestic presence.' Mr Tanna said this approach aligned with international principles of economic substance and demonstrates the UAE's efforts to maintain competitiveness while meeting global tax transparency standards. It also provides assurance that compliant investment vehicles, particularly those used for genuine portfolio diversification, will not be unintentionally caught in the corporate tax net, he explained. 'Furthermore, the decision reduces ambiguity around tax liability timelines by clearly anchoring nexus creation to either the dividend distribution date or the acquisition date, depending on compliance status,' Mr Tanna added. "This is particularly relevant for cross-border tax planning, fund structuring and Reit disclosures. 'Overall, Cabinet Decision No 35 reinforces the UAE's commitment to balancing fiscal responsibility with its reputation as an attractive, low-barrier investment hub – especially for institutional investors seeking certainty and regulatory sophistication.'
