Oman’s State Council Rejects Proposal To Tax Expat Remittances

A proposal, put forth by Oman government’s advisory body Shura Council, to impose a tax on remittances sent by expats to their home countries was rejected by the state’s economic committee, local media reported.

“The Majlis Al Shura’s proposal to impose a tax on remittances by expatriates was rejected at the State Council,” Salim bin Said Al Ghatami, the head of the economic committee at the State Council, was quoted as saying in Times of Oman.

“It is not the right time to impose a tax just on working expatriates. It’s not practical. It doesn’t go well with trade practices.”

He added that imposition of such a tax could also impact investment prospects in the Sultanate.

Al Ghatami also said that if the government wanted to stop the rate of outflow of money, then it should devise measures to make expats spend that in the domestic economy rather than levying taxes.

The recommendations of the state’s economic committee will now be send to higher authorities for a final review to decide if they wanted to impose the tax or not.

Oman, which ran a small budget surplus this year could likely run into a deficit in 2015 due to the plummeting oil prices.

In an effort to counter it, the Gulf country has been looking to boost its non-oil revenues through a slew of spending cuts and tax increases.

An introduction of a two per cent tax on expat remittances back to their home countries was one of the many reforms suggested by the government’s advisory body, the Shura Council, to increase revenues. If introduced, it will generate about OMR62 million for Oman’s economy.

The Sultanate, which is expected to announce its budget for the next year on Thursday, is also looking to introduce reforms such as a royalty on telecom operators, a “fair tax” on LNG exports, and an increase in royalties paid for mineral exploitation.

Spending cuts are important for Oman, which has less oil and gas reserves compared to its GCC neighbours, and is thus more vulnerable to the fluctuating oil prices.