Oman has announced plans to introduce personal income tax through a royal decree, making it the first Gulf nation to do so, according to its Tax Authority, Reuters reported. The move is part of the small oil producer's broader effort to diversify its revenue stream.
According to the decree, the tax, set to take effect in 2028, will apply at a rate of 5 per cent on taxable income for individuals earning over 42,000 Omani rials per year (approximately $109,091). The Tax Authority stated that the measure would impact about 1 per cent of the population.
The authority also noted that the new law includes deductions and exemptions tailored to Oman's social structure. These considerations cover areas such as education, healthcare, inheritance, zakat, charitable donations, and primary housing.
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Oman, which is still heavily reliant on oil revenue, has been working on fiscal reforms over the past few years. In 2020, it launched a medium-term fiscal programme designed to reduce public debt, broaden revenue sources, and encourage economic growth. According to the Reuters report, the plan has helped improve the country's financial position.
Implementing a personal income tax marks a significant step in Oman's long-term economic reform agenda, especially as other Gulf countries have so far avoided introducing similar measures. The measure is part of Oman's wider strategy to diversify its economy and strengthen its fiscal position.
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Other Gulf nations, such as Saudi Arabia and the UAE, have so far avoided introducing personal income tax. Their move marks a distinct policy shift in the region's fiscal landscape as Gulf economies continue to evolve.
Oman had earlier introduced a medium-term fiscal programme in 2020 aimed at reducing public debt and strengthening economic stability. The new income tax approach is consistent with the country's overall Vision 2040 plan which emphasizes economic diversification and long-term sustainability.
