Personal Income Tax Coming in First Arab GCC Country. UAE Cleared Stand on Charging PIT From Citizens.

Oman is on the verge of becoming the first country in the Gulf Cooperation Council (GCC) to implement personal income tax (PIT), with the new law expected to roll out as early as 2025. This move comes after the Shura Council advanced the draft law to the State Council, signaling that the bill is nearing the final stages of legislative approval. The proposal for PIT was first drafted in 2020, and its introduction marks a significant shift in the region's tax policies.

Oman Paves the Way for GCC Tax Reforms 🏛️📊

As Oman prepares to introduce personal income tax, analysts believe this could set a precedent for other GCC countries to follow suit. However, the introduction of similar taxes in other GCC nations is not expected in the immediate future. Oman’s experience may serve as a template for the eventual rollout of PIT in neighboring countries.

Minimal Impact on Most Residents 🌍

The new PIT regime is designed in such a way that the majority of expatriates and Omani citizens will not be significantly impacted. According to reports, foreign nationals earning over $100,000 annually in Oman will face a PIT of 5% to 9%. In contrast, Omani citizens will be taxed at 5% only if their net global income exceeds $1 million.

This means that the tax will primarily affect a small segment of the population. As per Emirates NBD Research, fewer than 4.2% of the population will likely be liable for PIT under the new regime, with a substantial portion of expatriates earning below the $100,000 threshold.

Oman's Role in Expanding the GCC Tax Base 📈

Oman has been a pioneer in the region in terms of expanding its tax base. The country introduced corporate income tax in 2009, which was later increased from 12% to 15% in 2017. However, Oman has lagged behind the UAE and Saudi Arabia in implementing value-added tax (VAT), which these countries have already adopted.

With a population of 5.2 million, including 2.2 million expatriates, Oman’s introduction of PIT is a strategic move to diversify its revenue sources away from oil dependency. The government’s focus is on expanding its tax base while minimizing the impact on the broader population.

What This Means for the Future of GCC Taxation 🧮

While Oman takes the lead in introducing personal income tax, other GCC countries, including the UAE, have stated that they have no immediate plans to follow. The UAE’s Ministry of Finance recently confirmed that personal income tax is not on the agenda, even as global financial institutions push for broader tax reforms in the region to bolster revenue streams.