Oman has announced plans to introduce personal income tax as part of efforts to diversify its economy and reduce dependence on oil revenues, according to the state-run Oman News Agency on Sunday.
The new tax, established through a royal decree, marks the first of its kind among the six oil-rich member states of the Gulf Cooperation Council (GCC). However, the 5% income tax will not take effect until 2028 and will apply only to individuals earning more than $109,000 annually, placing the burden solely on the top 1% of income earners in Oman.
It remains unclear whether this move will influence other Gulf nations to adopt similar policies. The International Monetary Fund (IMF) has previously forecast that Gulf states may need to introduce new forms of taxation to reduce their reliance on oil and broaden state revenue streams.
The Gulf region’s longstanding absence of personal income tax has been a major factor in attracting expatriate workers, supporting economic development across the area.
For Oman, however, the introduction of income tax is aimed at bolstering financial stability by expanding revenue sources beyond oil and gas, said Minister of Economy Said bin Mohammed Al-Saqri. He noted that depending on market conditions, oil and gas can contribute up to 85% of Oman’s public revenues.
"The tax serves as a new revenue stream to diversify public income sources and mitigate risks associated with reliance on oil as the primary revenue source," Al-Saqri stated.
Oman has been considering the implementation of personal income tax for several years. The decision follows earlier economic reforms, including a 2020 program aimed at reducing public debt and promoting economic growth. According to Al-Saqri, the tax is part of Oman’s broader Vision 2040 strategy, which seeks to transition the sultanate into a technology-driven economy.
