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Are you an expat in Oman or planning to move there? Get ready for a significant change in the country’s tax landscape. Oman is on the brink of introducing a personal income tax, a decision that could have far-reaching implications for the entire Gulf region.

A Break from the Norm

Historically, Gulf nations have attracted expatriates and fueled economic growth by offering a no-income-tax policy. However, Oman’s move marks a significant departure from this approach. The country aims to diversify its revenue sources beyond oil as part of its Vision 2040 plan.

The Draft Law

The Majlis Al-Shura, Oman’s lower house of parliament, has approved a draft law and forwarded it to the State Council for final legislative approval. While the proposed income tax rates are expected to be moderate, ranging between 5% to 9%, this measure aims to address concerns among expatriates and foreign investors.

A Regional Shift?

Oman’s decision may prompt similar actions across the Gulf in the medium term, according to Sico Investment Bank. Gulf states have increasingly introduced various tax initiatives to finance development and reduce dependency on oil and gas revenues.

A Look at the Neighbors

The UAE introduced a federal corporate tax on business profits last year, set at a low rate of 9% to maintain its business-friendly environment. Saudi Arabia imposes a corporate income tax rate of 20%, while Qatar levies 10%. The UAE, Saudi Arabia, Oman, and Bahrain have implemented a 5% Value Added Tax (VAT) rate on goods and services.

What’s Next?

As Oman moves towards introducing a personal income tax, it’s essential for expats and foreign investors to stay informed about the implications of this change. Will other Gulf nations follow suit? Only time will tell.