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Oman to Introduce GCC’s First Personal Income Tax · IMI Podcasts

• 0:00
  SPEAKER_00: Omen will implement a personal income tax, also known as PIT, on high earners starting January 2028, becoming the first Gulf Cooperation Council or GCC country to adopt such a measure.
• 0:15
  SPEAKER_00: The tax will impose a 5% levy on individuals earning more than 42,000 Omany reels per annum.
• 0:23
  SPEAKER_00: Approximately 110,000 US dollars.
• 0:27
  SPEAKER_00: The tax authority said it would implement PIT to diversify Oman's revenue base and reduce reliance on oil.
• 0:34
  SPEAKER_00: It added that it would set a high exemption threshold to ensure that 99% of Oman's population remains unaffected.
• 0:44
  SPEAKER_00: Authorities plan to issue executive regulations detailing the taxes' implementation within a year of its publication in the official Gazette, which is set to happen next week, according to local media.
• 0:58
  SPEAKER_00: Sadhaf Buchanan, partner and head of banking and finance at Denton's, explained that the introduction of PIT has been a hot topic for years for those in the know, but its rollout faced delays due to the pandemic and Oman's recent implementation of VT.
• 1:19
  SPEAKER_00: The PT will apply to both Omanni citizens and expatriates with high incomes.
• 1:25
  SPEAKER_00: At a flat rate of 5%, the tax remains modest by global standards, but marks a significant policy shift for the GCC, which has long been associated with a tax-free environment.
• 1:38
  SPEAKER_00: The law spans 76 articles across 16 chapters defining taxable income and outlining deductions and exemptions.
• 1:48
  SPEAKER_00: Deductions will cover various expenses, including education, health care, primary housing, inheritance, charitable contributions, and donations.
• 1:59
  SPEAKER_00: Authorities will release the full details of these provisions next week.
• 2:04
  SPEAKER_00: Buchanan emphasized the need for clarity on how deductions will be calculated and whether differences will exist between expatriates and Omani citizens.
• 2:15
  SPEAKER_00: Quote, I believe the real detail will be in the executive regulations, and those may not be issued for another year, end quote, she added.
• 2:25
  SPEAKER_00: Oman's introduction of personal income tax aligns with its broader economic strategy to address fiscal challenges and reduce dependency on oil revenues.
• 2:36
  SPEAKER_00: Oman aims specifically to increase non-oil related government revenue to nearly 20% by 2040, thereby diversifying its fiscal base, promoting wealth redistribution, and enhancing social equity.
• 2:51
  SPEAKER_00: As of 2024, Oman's oil and gas sector contributes approximately 30 to 40% of the country's GDP and directly generates over 85% of government revenue.
• 3:05
  SPEAKER_00: Although Oman is the first to introduce the PIT, it is not the most oil-dependent country in the GCC.
• 3:12
  SPEAKER_00: Oil dependency remains high across GCC economies.
• 3:17
  SPEAKER_00: Kuwait derives 80 to 90% of its government revenue and 50 to 60% of its GDP from hydrocarbons, making it one of the most oil-dependent countries.
• 3:28
  SPEAKER_00: Qatar follows, with oil and gas contributing 70 to 80% of revenue and 45 to 55% of GDP.
• 3:37
  SPEAKER_00: Saudi Arabia has moderate dependence, with oil accounting for 60 to 70% of government revenues.
• 3:45
  SPEAKER_00: Saudi Arabia's oil share of GDP is around 40 to 50%.
• 3:50
  SPEAKER_00: The UAE is the most diversified, with oil accounting for only 25 to 30 percent of GDP.
• 3:58
  SPEAKER_00: Bahrain's financial sector reduces the oil sector's contribution to GDP to approximately 15 to 20 percent, yet oil still represents around 70 to 75 percent of government revenue.
• 4:12
  SPEAKER_00: While geopolitical tensions, such as the recent Israel-Iran conflict, have temporarily pushed oil prices to nearly$90 per barrel, the long-term trend has been one of declining oil prices.
• 4:26
  SPEAKER_00: This is pushing GCC governments to explore alternative revenue generation strategies.
• 4:32
  SPEAKER_00: Oman's PIT represents a departure from traditional GCC fiscal policies, yet it reflects a broader trend of tax reforms across the region in recent years.
• 4:45
  SPEAKER_00: Since 2017, GCC countries have introduced various taxes to reduce their reliance on oil.
• 4:54
  SPEAKER_00: Value added tax is now in effect across the region.
• 4:58
  SPEAKER_00: Saudi Arabia implemented it in 2018 and later increased the rate to 15%.
• 5:05
  SPEAKER_00: The UAE and Bahrain levy a 5% VAT, while Oman followed suit with its own 5% VET in 2021.
• 5:15
  SPEAKER_00: Corporate income taxes, referred to as CIT, have also expanded.
• 5:21
  SPEAKER_00: Oman and the UAE have imposed rates of 15% and 9% respectively, while Saudi Arabia taxes foreign owned businesses at 20%.
• 5:32
  SPEAKER_00: The likelihood of other GCCC countries adopting personal income tax varies.
• 5:38
  SPEAKER_00: Kuwait and Bahrain, with their heavy reliance on oil revenues and less diversified economies, may be more motivated to implement such measures to shore up their budgets.
• 5:49
  SPEAKER_00: In contrast, the UAE remains an outlier.
• 5:53
  SPEAKER_00: Oil aside, its economic model now also depends on attracting high net worth individuals and expatriates by maintaining minimal taxation.
• 6:04
  SPEAKER_00: Introducing PIT in the near term could undermine its reputation as a low tax haven, making it less likely to follow Oman's lead for now.
• 6:15
  SPEAKER_00: Still, Buchanan speculated that Oman's PIT might not remain an isolated measure.
• 6:22
  SPEAKER_00: Quote, while Oman may be the first, I don't believe it will be the last.
• 6:27
  SPEAKER_00: End quote, she said, adding that institutions like the IMF have long recommended tax reforms to strengthen fiscal policies across the GCC region, not just in Oman.
• 6:44
  SPEAKER_00: This episode first appeared as an article by Mustafa Daily on IMIDaily.com.
• 6:50
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