Most expatriates and nationals in Oman, set to become the first GCC nation to implement a personal income tax (PIT), will not be affected by this new tax system. Oman is anticipated to introduce personal income tax next year, following the Shura Council's forwarding of the draft law to the State Council. With the bill approaching the conclusion of its legislative review, it is expected to be enacted in 2025. The draft was initially prepared in 2020.
"At the outset, the new PIT will not affect the majority of Oman's population, whether they are expatriate workers or citizens," Emirates NBD Research stated in its recent analysis on the UAE's neighboring country. Analysts predict that other Gulf Cooperation Council (GCC) countries may also adopt personal income tax, though not soon. Oman's model could serve as a blueprint for introducing personal income tax in other GCC nations.
As reported by Khaleej Times last year, Haji Al Khouri, the UAE's Ministry of Finance undersecretary, mentioned that the UAE has no plans to introduce personal income tax. International financial institutions have been urging the UAE and other GCC countries to implement new taxes to diversify their revenue sources beyond petrodollars. The UAE recently introduced a 9 percent corporate income tax to enhance its revenue.
Emirates NBD Research cited reports indicating that foreign nationals earning over $100,000 from Oman will be subject to a PIT ranging from 5 to 9 percent. Omani citizens, on the other hand, will face a much higher threshold of $1 million in global net income, taxed at 5 percent. "The new PIT could be implemented as early as 2025, placing Oman at the forefront of expanding the tax base in the GCC. Oman has had a corporate income tax since 2009, which was increased from 12 to 15 percent in 2017, a tax that has only recently been introduced in the UAE. However, Oman has been slower than the UAE and Saudi Arabia in introducing VAT," it noted.
There are 2.2 million expatriates in Oman, constituting 42.3 percent of the total population of 5.2 million. Of these, the majority (1.4 million) have educational attainment below a general diploma. "While not a definitive indicator of income, only 214,503 expatriate workers hold a bachelor's degree or higher diploma, suggesting that the number of foreign workers earning over $100,000, subject to PIT, is likely even lower than this - less than 4.2 percent of the overall population. The number of Omani citizens meeting the $1 million annual income threshold is also expected to be minimal," it concluded.
