Oman may no longer be a tax-free haven for high-earners. From the year 2028, it will impose an income tax of 5 per cent on those whose annual incomes are 42,000 rials ($109,000) and above, the state-run Omani news agency was quoted as saying. With this decision, Oman will be the first Gulf state to initiate taxing its wealthy, possibly influencing others to follow suit.
The measure, said Oman’s Minister of Economy, Said bin Mohammad Al-Saqri, is intended to reduce its dependence on oil as the global demand for fossil fuels wanes.
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It is noteworthy that the six-nation Gulf Cooperation Council (GCC) does not levy income tax, making the region highly attractive to migrant employees. The oil-rich Gulf States are so far financially abundant, except Saudi Arabia and Bahrain, which are expected to run deficits this year. The International Monetary Fund (IMF) said these two may need to start earning through income tax soon.
Monica Malik, chief economist, Abu Dhabi Commercial Bank, told Bloomberg that Oman’s move to tax its wealthy top 1 per cent will be a “significant fiscal development in the region”.
“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,” she said.
The sultanate of Oman has been divesting into other sectors than just oil, especially privatization, through which it has been raising funds. From the initial public offering of its state energy company’s exploration and production unit last year, it raised $2 billion.
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