No tax on remittances

31 Dec 2014
POSTED BY Y Magazine

A  decision from the economic committee of the State Council of Oman rejecting a tax on remittances has come as a huge relief to the 1.9 million expats living in Oman, especially those from the Indian subcontinent, who regularly send money to their home countries.

“It is not the right time to impose a tax just on working expatriates. It’s not practical. It doesn’t go well with the trade practices. Imposing such a tax on a certain category of expatriates doesn’t meet the international agreements signed by the Sultanate with other countries. It will also affect investment prospects in Oman,” Salim bin Said al Ghatami, the head of the economic committee told a local newspaper.

In November last year, the Majlis Al Shura called for a 2 per cent levy on remittances, explaining that it was a way for the Sultanate to overcome the ongoing budget deficit due to the decline in oil prices. The proposal caused a storm among the expat population, many of whom thought such a tax would be incredibly unfair and penalise the poor. In addition to this, many experts feared that if the tax came into place it would lead to an increase in black market money transfers.

Expatriates send home billions of rials each year and it was estimated that if imposed, the tax on remittances would have added RO60 million to Oman’s income.

“We need to find ways to generate more income other than depending on oil revenue. My opinion is that we should promote more non-oil projects to generate income rather than imposing tax on remittances,” Tawfiq al Lawati, a member of the Majlis Al Shura told the newspaper.

“[The] Government should focus on getting more returns from projects because it has invested a lot and fair pricing of gas prices is also a must,” Al Lawati added.

According to a Central Bank of Oman report released in July last year, expat remittances stood at RO3.502 billion in 2013, a 12.6 per cent increase on what was sent in 2012.

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