You are here: Home » International » News » Economy
Business Standard

Cash-strapped Oman to break Gulf's income tax taboo to curb deficit

To levy income tax on high earners starting 2022


borrowing, fiscal deficit, market, stimulus
The tax would apply to high-income individuals, but the plan — whose implementation is still currently being studied — doesn’t specify income brackets | Illustration: Binay Sinha

Cash-strapped plans to take a step unheard of in the Persian Gulf region: It’s going to start taxing the income of wealthy individuals beginning in 2022, as part of a broader program to tackle a budget deficit that’s ballooned due to low oil prices and the coronavirus pandemic.

By reducing government spending while spurring investments, the plan is projected to bring the budget deficit — estimated to reach nearly 19 per cent of gross domestic product in 2020 by the Monetary Fund — to 1.7 per cent by 2024, the Ministry of Finance said in an emailed statement on Sunday. Revenue from the income tax will be used to fund social programs, it said.


The tax would apply to high-income individuals, but the plan — whose implementation is still currently being studied — doesn’t specify income brackets.

Affluent governments in Arab Gulf economies have long steered clear of imposing taxes of any kind, both because the region’s tax-free status has been used to attract labour and companies, and because officials feared a possible backlash from citizens who have no say in how the state spends.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, November 03 2020. 01:40 IST