Latest news with #personalIncomeTax
The National
7 hours ago
- 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.
Al Arabiya
9 hours ago
- Business
- Al Arabiya
Oman to become first Gulf country to impose personal income tax
Oman issued a royal decree to become the first country in the Gulf to impose a personal income tax, its tax authority said on Sunday, as the small oil producer works to diversify its revenue stream. Oman, among the smaller Gulf economies, launched a medium-term fiscal program in 2020 to reduce public debt, diversify revenue sources, and spur economic growth, which has improved public finances. Oman, which still remains largely reliant on oil revenue, will impose a 5 percent tax on taxable income for individuals earning over 42,000 Omani rials ($109,091) per year starting from 2028, according to the decree. 'The law also includes deductions and exemptions that take into account the social situation in the Sultanate of Oman, such as education, healthcare, inheritance, zakat, donations, primary housing,' the country's tax authority said in a statement. The Gulf country added that the tax would apply to about 1 percent of the population. ($1 = 0.3850 Omani rials)
Zawya
9 hours ago
- Business
- Zawya
Oman: Income tax to diversify economy, shore up social protection
Oman is on the cusp of a significant shift in its tax landscape with the introduction of a personal income tax (PIT). This move, a first for the Gulf Cooperation Council (GCC) region, aims to diversify the country's revenue streams and reduce its reliance on oil revenues. The introduction of personal income tax in Oman is a strategic move to diversify revenue streams and address economic challenges. While it may present some challenges, it also reflects Oman's commitment to aligning its tax regime with global standards and fostering economic growth. The Personal Income Tax Law, as per Royal Decree No 56/2025, consisting of 76 articles distributed across 16 chapters, stipulates a 5 per cent tax on the taxable income of natural persons whose gross annual income exceeds RO 42,000, derived from specific income types as defined by the law. The law also includes deductions and exemptions accounting for social considerations in the Sultanate of Oman, such as education, healthcare, inheritance, zakat, donations, primary housing and other factors. The Tax Authority said that the Personal Income Tax Law complements the tax system in line with Oman's economic and social conditions and aligns with the role assigned to the Tax Authority. It also contributes to the objectives of 'Oman Vision 2040' by diversifying income sources and reducing reliance on oil revenues, with targets of 15 per cent of GDP by 2030 and 18 per cent by 2040. Additionally, the tax aims to promote wealth redistribution among societal segments, enhancing social justice, while supporting the state budget and specifically financing part of the social protection system. The implementation follows an in-depth study assessing its economic and social impact, with approximately 99 per cent of Oman's population expected to be exempt. The executive regulations of the law will be issued within a year of its publication in the Official Gazette. An electronic system has been developed to promote voluntary compliance, linked with relevant departments for accurate income calculation and verification. The initial plans for an income tax were announced in 2020. The draft proposals suggested a tax rate ranging from 5 per cent to 9 per cent for Omani citizens and expatriates. However, the implementation date has been repeatedly postponed. With all necessary preparations and requirements for implementing the tax completed, the executive regulations of the law will be issued within one year of its publication in the Official Gazette. 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. The Tax Authority has also strengthened its workforce through specialised training programmes in line with the tax implementation requirements. Additionally, guidance manuals for natural and legal persons will be published according to a predetermined schedule. Oman's move to introduce a personal income tax sets it apart from other GCC countries, which currently do not have a personal income tax. While Oman is introducing a personal income tax, it already has a corporate tax framework in place. The standard income tax rate for businesses is 15 per cent. However, small and medium enterprises (SMEs) meeting specific criteria can benefit from a reduced tax rate of 3 per cent. Special provisions apply to the petroleum sector, with a tax rate of 55 per cent. 2022 © All right reserved for Oman Establishment for Press, Publication and Advertising (OEPPA) Provided by SyndiGate Media Inc. (
