In a significant move, Oman’s State Council and Majlis A’Shura have approved a draft law on personal income tax, marking a pivotal shift in the Sultanate’s fiscal policy.
Key Highlights of the Draft Law:
- Tax Exemption Limit Raised: Individuals earning up to OMR 50,000 annually will be exempt from income tax, offering relief to middle-class citizens.
- Reduced Tax Rate: A 5% personal income tax rate has been proposed, aimed at balancing revenue generation with economic growth.
- Exemptions: End-of-service gratuities and similar benefits will remain tax-free, as they are not classified as income.
According to a report in the Oman Observer, the tax will only be imposed under suitable economic conditions, ensuring minimal disruption to the broader population. Oman’s Minister of Finance emphasized that while increasing VAT would impact all residents, this income tax will affect just 1% of the population.
Broader Legislative Reforms
Alongside the income tax draft, the councils have approved six additional draft laws, covering:
- Electronic Transactions
- Public Health Regulations
- Human Organ and Tissue Transplants
- Special Economic Zones and Free Zones
In 2024, Oman generated around OMR 1.4 billion in tax revenue from corporate taxes, selective taxes, and VAT collections.
This move aligns with a broader trend across the GCC, where nations are transitioning from traditional tax-free models to diversified, sustainable revenue streams amid global economic shifts.
News Source: Gulf Business
