Oman may be the first Gulf country to introduce personal income tax

Non-OPEC Oman, which joined the OPEC+ deal, may become the first Gulf country to be forced to impose an income tax on individuals due to the collapse in oil prices.

The monarchies of the Persian Gulf were perhaps the hardest striked by the collapse in demand for crude oil on world markets, as foreign exchange earnings from black gold exports formed the basis of the revenue part of their budgets.

Oman is no exception in this regard. Since the beginning of 2020, its budget deficit has only increased, which required the authorities to take certain measures to respond. As part of the adjusted development plan for the country, calculated until 2024, Oman will abandon some expenditure items of the budget, introduce a value — added tax, and in 2022-and an income tax on individuals. These measures should help the monarchy reduce the budget’s dependence on oil revenues.

According to the International monetary Fund, Oman’s economy has already decreased by 10 percent, and the budget deficit has exceeded 20 percent of GDP, which is why Moody’s and Fitch have already lowered the country’s credit rating twice this year.

However, the situation in other monarchies of the Persian Gulf is no better. For example, the United Arab Emirates and Bahrain have already introduced a value-added tax, while Qatar has eliminated inefficient fuel subsidies.