Saturday 20 / April / 2024
Muscat: Expat remittances will not be hit by taxes, Central Bank of Oman (CBO) Chief Hamood Sangour Al Zadjali has said publicly for the first time.
Remittance tax: Here’s how expats in Oman reacted
Despite numerous government measures taken this year to help balance the books in the wake of slipping oil prices, including scrapping the petrol price cap and reining in public sector bonuses, expat remittances will not be affected.
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The CBO chief made the statement while speaking exclusively to the Times of Oman’s Arabic sister paper Al Shabiba.
Al Zadjali said imposing a tax on expatriates’ remittances is subject to several considerations.
“From the legal aspect, the International Monetary Fund (IMF) Agreement, to which the Sultanate is committed, provides that no restrictions should be imposed on payments and transfers classified as current international transactions, except with the approval of the IMF.”
“Very few countries, and no GCC (Gulf Cooperation Council) country, impose such taxes.”
A remittance tax was seriously proposed by members of the Majlis Al Shura back in November 2014; however, the idea was quickly dismissed by the State Council.
Al Zadjali noted that expats’ remittances had recorded a slight increase of 1.1 per cent during the first half of this year, touching more than OMR2.13 billion.
But he added that while expats remittances do represent a leak from Oman’s total domestic savings, thus affecting the country’s foreign reserves, the contributions of migrant workers need to be taken into consideration.
“Migrant workers bring new skills that are not available in the host countries, which enable such countries to produce the goods and services they previously imported, he said.
Migrant workers help produce and export new goods, in addition to implementing various mega projects in infrastructure and other sectors,” he stated.
Reacting to Al Zadjali’s statement, Ahmed Al Hooti, an OCCI (Oman Chamber of Commerce and Industry) member said this is not the right time to impose taxes on expats as they are helping and working in our society.
“I hope the economy will recover soon and so we don’t have to think of all these measures to generate more money in the economy,” he said.
Javed Sheikh, a Pakistani businessman living in Oman, said: “This is actually good news for expats, no remittance tax means people from our community can send more money to our home country and help provide for their families living back home, because a lot of them are living here, but have families back home as they do not earn enough to bring their families here. It is a good decision and we are grateful for what Oman is doing.”
According to Maaz Firdous, a consultant at Al Iskaan Engineering Consultancy, if such a tax is levied it would affect people with low income dramatically and unnecessarily increase their problems. “
If applied, the tax would become a major source of trouble for workers who want to earn less. These are the people, who according to Omani law, can’t keep their families in Oman and therefore send most of their money back home. Taxing them isn’t the right thing to do anyway.”
He added that taxes should be imposed on people earning higher incomes, instead of bothering people who are struggling to earn a living.
Prefer to stay
Deepal Pallegangoda, country manager of SriLankan Airlines in Muscat, said Oman needs expats. “Now many people will prefer to stay in this country, as we all love Oman,” he said.
Commenting on the economic activity front of the Sultanate, CBO Chief Al Zadjali said the Sultanate is witnessing a slowdown in economic activity. The latest available data for the first quarter of this year indicates a continuing decline in GDP due to the steep drop in value added petroleum activities and given the continuing low levels of oil prices.
Al Zadjali said some non-oil sectors have managed to grow at different rates, but the significant decrease in the added value of the wholesale and retail sectors and the manufacture of basic chemicals had led to a slight decline in the total added value generated from these activities.
He stressed that competent authorities are in the process of drafting a new investment law in the Sultanate, which is expected to be more liberal and flexible, to will make it easier to do business in Oman.
He further noted that the government has adopted the initiative to pursue a balanced policy in terms of spending and diversifying its funding resources in order to deal with the deficit in the general budget and current account, which has led to maintaining the liquidity of the local banks at appropriate levels, as well as to get the much needed external financing.
Al Zadjali concluded that with economic diversification initiatives going forward in various sectors of the economy, including the strengthening of the role of the private sector and stimulating foreign investment, as well as continuing government spending on strategic projects, Oman’s economy will be able, in the foreseeable future to bring about a structural change in its activities.
This, he said, will enable it to achieve a concrete increase in the government’s non-oil revenue and be able to increase non-oil exports, and thus adapt more smoothly to the developments in global oil prices and achieve more sustainable growth rates.
