Small and medium enterprises (SMEs) and middle-income families are the engines of economic growth. They generate jobs and income generation opportunities, drive innovation and sustain markets.

In Oman, where SMEs account for over 96 per cent of businesses and contribute 24 per cent of GDP, their success is essential for national prosperity. Yet, excessive charges and fees and counterproductive regulatory frameworks are stifling their potential. These excessive charges are making our market less attractive, especially for almost a third of the population who are under 30s and the other third who are retired or almost retired. This is in addition to the fact that excessive charges make any market less attractive for any Foreign Direct Investment (FDI) and high growth startups.

The growing pressures on SMEs — from commercial registration fees to municipal and labor clearances, taxes, Social Protection Fund fees, online salary transaction fees, rents and banking costs — restrict their ability to innovate and compete. At the same time, middle-income families, who rely on these businesses for opportunities, are squeezed by rising costs, reducing their disposable income and economic participation. To reverse this trend, Oman needs a smarter approach to charges—one that fosters growth while aligning with the goals of Oman Vision 2040.

Today, income generation is no longer confined to traditional public sector or big corporate jobs. Digital transformation has unlocked opportunities for remote work, digital nomads and online entrepreneurship. Platforms such as Upwork and Fiverr empower individuals to earn across borders, while global firms increasingly hire remote talent. For Oman, similar platforms are yet to be successful, and capitalising on these trends could diversify income sources and reduce unemployment.

However, this requires a supportive ecosystem. Excessive fees and rigid regulations deter digital freelancers and small business owners from operating locally. For instance, high banking and licensing costs make Oman less competitive compared to neighboring economies like Bahrain, which actively supports digital entrepreneurship.

By adopting "smart charges," Oman can encourage SMEs and individuals to thrive in the digital economy, unlocking new streams of revenue while building a robust and inclusive financial framework.

“Smart charges” refer to flexible, data-driven fee structures designed to align with economic growth goals. Using artificial intelligence (AI), these charges can be tailored to the needs of SMEs, digital workers and middle-income families. AI can analyse economic data, market trends and business performance to ensure charges are proportional, fair and growth-oriented.

For instance:

• Dynamic Fee Adjustments: AI could adjust fees based on the size and maturity of a business. Startups might pay lower fees in their initial years, while established firms contribute more.

• Targeted Incentives: Digital freelancers and remote workers could receive discounts on licensing or banking fees, incentivizing them to register and operate locally.

• Outcome-Based Models: Charges could be tied to performance indicators like revenue growth or job creation, ensuring they support rather than hinder economic activity.

This approach echoes the insights of Ibn Khaldun, who argued that fair and proportional taxation stimulates prosperity. As he wrote: “If the government takes excessive property through taxation, its effects will appear in reduced productivity and economic decline.” Nobel laureate Paul Krugman offers a modern perspective: “Economic policies that stifle the middle class ultimately stifle economic growth.” By replacing blunt fees with smarter, AI-driven models, Oman can promote economic vitality without burdening businesses or families.

Countries with comparable market sizes offer valuable lessons. Estonia, known as a global leader in digital innovation, has implemented e-residency programmes and capped fees for SMEs and digital entrepreneurs. This has attracted a global workforce and fueled local economic growth.

Bahrain, another regional success story, has simplified its licensing processes and introduced incentives for digital startups, positioning itself as a hub for fintech and remote work.

Even larger economies like Singapore and Ireland have used targeted fee reductions and tax incentives to attract global talent and foster SME growth. Their success underscores the importance of aligning charges with broader economic goals.

By implementing smart charges, the government can create an ecosystem that incentivises SMEs to grow naturally, encourages digital entrepreneurship and stablises the disposable income of families. This approach will not only reduce financial burdens but also unlock new income-generating opportunities, from digital freelancing to remote work.

Smart charges are more than a financial tool — they represent a strategic shift toward inclusive and sustainable economic growth that reduces the gap beween income classes. By leveraging AI and adopting global best practices, Oman can ensure that its SMEs and families flourish in an increasingly competitive world.

As we look towards Oman Vision 2040, the question is no longer whether smarter charges are needed, but how quickly we can implement these solutions that drive progress for all.

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