The Impact of Digital Taxation in Shaping the Business Environment in the Sultanate of Oman - Opportunities, Challenges, and Policy Implications

Abstract

The rapid growth of the digital economy has significantly reshaped taxation systems and business operations worldwide. In the Sultanate of Oman, digital taxation has emerged as a key component of economic reform efforts aimed at enhancing fiscal sustainability and supporting diversification under Oman Vision 2040. The digital taxation has emerged as an important fiscal policy tool for modernizing tax systems, improving revenue mobilization, and ensuring equitable taxation of digital economic activities. In the Sultanate of Oman, the growing digital economy and on-going economic diversification under Oman Vision 2040 have increased the importance of developing an effective digital taxation framework. This study examines the impact of digital taxation on shaping the business environment in Oman by evaluating its opportunities, challenges, and policy implications. A quantitative research approach was adopted using a structured questionnaire administered to business owners, tax professionals, accountants, and policymakers. The collected data were analysed using descriptive statistics, reliability analysis, correlation, and regression techniques to assess the relationship between digital taxation and the business environment. The findings indicate that digital taxation contributes to improved tax compliance, increased government revenue, greater transparency, and enhanced fairness in the taxation system. However, businesses face challenges including compliance costs, limited digital readiness among small and medium-sized enterprises (SMEs), regulatory uncertainty, and technological implementation issues. The study concludes that an effective digital taxation system can positively influence Oman's business environment when supported by clear regulations, robust digital infrastructure, stakeholder awareness, and continuous policy reforms. The research provides practical recommendations for policymakers to strengthen digital tax administration while minimizing the compliance burden on businesses and promoting sustainable economic growth. This study contributes to the growing body of knowledge on digital taxation and offers insights for enhancing tax policy and business competitiveness in the Sultanate of Oman.