 "Omani men pass in front of Canadian cafe and bake shop Tim Hortons in City Center Mall in Muscat, Oman, February 11, 2019. Picture taken February 11, 2019. (Reuters/Hamad I Mohammed)")
Oman has announced the imposition of personal income tax, becoming the first Gulf country to do so.
The move to collect income tax is part of Oman’s attempt to diversify revenue sources and reduce public debt.
In the petroleum-rich Gulf region, countries do not impose a personal income tax. Firstly, governments earn plenty of revenue from oil and gas. Secondly, zero personal income tax attract high net worth individuals. Thirdly, these countries make up for revenue lost from foregoing income tax with corporate income taxes, value-added tax (VAT), customs duties and fees.
The personal income tax collection will start in Oman in 2028.
What we know of Oman’s income tax?
Oman will collect 5 per cent personal income tax on taxable income from people earning more than 42,000 Omani rials ($109,091) per year starting 2028, according to Reuters.
“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 news agency quoted Omani tax authority as saying.
The tax authority said such a tax will apply to around 1 per cent of the Omani population.
Economy Minister Said bin Mohammed Al-Saqri was quoted as saying by Bloomberg that the measure will reduce reliance on oil revenues by diversifying public revenue while maintaining social spending.
Even as no other Gulf country has announced such a measure, experts have said that might change in coming years as expenditures of governments rise and revenue sources remain stagnant, leading to deficits. Saudi Arabia and Bahrain are set to have deficits this year. The International Monetary Fund (IMF) has said that more Gulf countries may introduce personal income tax in coming years, particularly as they prepare for a world in which fossil fuel loses