Personal Income-Tax in Oman on top earners from 2022
Oman expects to introduce an income tax on individuals earning higher incomes from 2022, the finance ministry said in the 2020-2024 mid-term economic plan, new details of which were published late on Sunday, as the Gulf state seeks to restore finances battered by low oil prices.
The government is aiming to increase its revenues to OMR 12.1 billion with a total spending of OMR 12.6 billion by the end of 2024. The plan aims to bring Oman’s fiscal deficit down to 1.7 per cent of gross domestic product by 2024, from a preliminary deficit of 15.8 per cent this year.
It also has a target of increasing non-oil revenues to 35 per cent of total government revenue by 2024, from 28 per cent this year.
None of the six Gulf Cooperation Council (GCC) states, all oil producers, currently collect income tax from individuals. An income tax on individuals would be a first in the Gulf. It will be a significant move and closely watched by other GCC countries.
Oman’s Sultan Haitham, who took power in January, last month approved the medium-term fiscal plan to make government finances sustainable as the coronavirus crisis and low oil prices strain state coffers.
“This initiative is still under study, all aspects of its application are being considered. It is expected to apply this tax in 2022,” the 2020-2024 medium term economic balance document said.
The plan also aims to redirect state subsidies to only those groups who need it, rather than subsidising all users. Calculating new electricity and water tariffs will be done gradually in the coming years, the document said.
According to the International Monetary Fund, Oman’s economy is expected to shrink by 10 per cent this year, the biggest contraction in the Gulf, and its fiscal deficit could widen to 18.3 per cent of GDP from 7.1 per cent last year.
Sultan Haitham in mid-October said a 5 per cent value-added tax would come into force in April 2021, as part of efforts to diversify government revenues.
All six Gulf Arab states agreed to introduce 5 per cent VAT in 2018 after a slump in oil prices hit their revenues.