As mentioned in our previous article on 18 July 2024, Oman is set to become the first Middle East country to launch personal income tax, originally from January 2025, however its launch has been postponed to approx. 2026 due to the need for further analysis.
Oman has recently issued a new draft of PIT with significant changes increasing the exemption threshold and decreasing the proposed tax rates.
While it was originally proposed 9% rate of PIT and to apply to foreign expatriate workers with an annual income of RO 30,000 and above (approx. 75,000 EUR), under the new draft the tax exemption limit has been increased to RO 50,000 annually (approx. 125,000 EUR) and the tax rate reduced to 5%. Moreover, end-of-service gratuity and other benefits should be exempt from PIT which, naturally, will have a big impact on expatriate workers.
This puts the PIT rate on par with Omani citizens who would be taxed 5% on their global income exceeding 1 million USD (approx. 950,000 EUR).
The rationale behind its adoption is to diversify and reduce Oman’s reliance on oil and gas revenue, however its adoption is an unprecedented move amongst Middle East countries, it may drive expatriate high earners to move to its tax-free neighbours and deprive Oman of both, the expertise of skilled expatriates and investment of international businesses. Indeed, the UAE and Saudi Arabia have indicated they have no plans to introduce personal income taxes.
Are you interested to know more about taxation in Oman and other Middle East countries? Let’s talk. With our focus on tax and over 20 years’ experience in taxation of different countries, we provide you with the best solution to suit your specific needs. Call us at +971 521 521 330 or email us at office@alphaprimedwc.ae. Thank you for your trust.
