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Will other GCC countries follow Oman in introducing personal income tax?

Oman is set to become the first country in the Gulf Cooperation Council (GCC) to introduce personal income tax, with the new tax expected to be rolled out sometime next year.

The Shura Council has moved the draft law to the State Council, and with the bill nearing the final stages of legislative approval, it is likely to be implemented in 2025. The initial draft was created in 2020.

Analysts believe that Oman’s move could serve as a model for other GCC countries, although they do not expect these countries to introduce personal income tax in the near future. Notably, the UAE has no current plans to implement such a tax. However, the UAE did recently introduce a 9% corporate tax to diversify its revenue sources away from oil.

Most residents in Oman, including expatriates and nationals, are not expected to be significantly impacted by the new tax. According to Emirates NBD Research, foreign nationals will be subject to a personal income tax (PIT) ranging from 5% to 9% on incomes exceeding $100,000. For Omani citizens, the threshold is much higher, with net global incomes over $1 million being taxed at 5%.

The introduction of PIT is expected to widen the tax base in Oman, continuing the trend of expanding tax systems in the GCC. Oman has had a corporate income tax since 2009, which was increased from 12% to 15% in 2017. In comparison, VAT was introduced later than in the UAE and Saudi Arabia.

Oman’s population includes 2.2 million expatriates, making up 42.3% of the total 5.2 million residents. Of these expats, the majority have education levels below a general diploma, with only about 214,503 holding a bachelor’s degree or higher.

Thus, the number of foreign workers earning over $100,000 and subject to PIT is likely to be small, representing less than 4.2% of the total population. Similarly, the number of Omani citizens meeting the $1 million annual income threshold is expected to be minimal.

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