Oman to be first Gulf state to introduce income tax


Sarah Peddie

Oman will become the first gulf state to introduce income tax on high earners in 2022 as the country tries to restore finances due to low oil prices. 

All six Gulf Cooperation Council states currently do not take income tax off any individual. 

However, Oman’s Sultan Haitham took power in January and has since approved a medium-term fiscal plan to make government finances sustainable as the coronavirus and low oil prices put a strain on the country’s finances.

The finance minister had introduced the 2020-2024 economic plan last week and stated that income tax will be brought in on high earners in 2022. 

There is no current date for when it will be introduced but the plan had lined out that revenues from it would go towards social programmes.

Monica Malik, chef economist at Abu Dhabi Commercial Bank told Reuters: “An income tax on individuals would be a first in the Gulf. I think it will be a significant move and closely watched by other GCC countries.”

The 2020-2024 medium term economic balance document stated: “This initiative is still under study, all aspects of its application are being considered. It is expected to apply this tax in 2022.”

Governments throughout the gulf states have steered clear of introducing any sort of tax as it attracts labor and companies. 

Although, the UAE, Saudi Arabia and Bahrain all have value-added tax due to the 2014 oil crash which made some of the states question their generous state-supported benefits. 

Tax experts have now said that other Gulf countries could follow Oman in introducing income tax. It is expected that Bahrain and Kuwait could be the next to follow and introduce income tax in 2023. 

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