Oman To Introduce Income Tax; Over 6 Lakh Indians To Be Impacted By New Rule

Income tax has been a topic of discourse amongst Indians, particularly the country's 'Middle Class', ever since the Union Budget was presented in July. But the wave of Income Tax may not be limited to the shores of the peninsula, as, according to reports, the GCC or Gulf Cooperation Council countries may also start levying income tax, with Oman likely to take the lead.

Oman Government's Income Tax

According to some reports, Oman might become the first of the GCC countries, which includes the likes of Saudi Arabia, Kuwait, the United Arab Emirates, Qatar and Bahrain, to gather income tax from earners in the country.

The Omani government is expected to levy 5 to 9 per cent in taxes from those individuals earning above Rs 84 lakh.

This taxation system is expected to affect as many as 6 lakh Indians who live and work in Oman. Many of these Indians also send remittances back to India. According to reports, these remittances amount to Rs 27,000 crore.

This comes amidst the development of more such developments in the Petro-Monarchies. Apart from Oman, there are talks of ending the zero-income tax system in Kuwait as well. Meanwhile, countries like Saudi Arabia and the United Arab Emirates still want to move ahead with the tax-free system.

Shift In Prospects

When we look at the larger Indian diaspora living in the Gulf countries,. According to government of India data, there are 8.9 million Indians practicing their trade in the aforementioned nations, on the other side of the Arabian Sea.

The aforementioned Petro-monarchies have been largely driven by the crude oil boom and therefore have developed systems that are largely welfare-orientated, in which the country or the 'state' gives out for the citizens from its own coffers.

Hence, taxation and its presence in these countries have largely been negligible. It was only recently that this system saw a paradigm shift.

With decreasing oil reserves and declining usage of petroleum products (many as a part of the much-touted green transition), many of these nations have been forced to look elsewhere for alternative sources of revenue to keep the system intact.

Apart from the emphasis on expanding businesses and tourism, leaving taxes on products has been another way of keeping the Arabian boat afloat.

Saudi Arabia currently imposes a VAT or Value Added Tax of 15 per cent on most products. This trend could further develop into more taxation, affecting the immigrant workforce in India.