Oman to Implement Personal Income Tax on High Earners Starting 2028, First in GCC

Historic Fiscal Shift for Oman

Oman is set to make a landmark change to its fiscal landscape with the introduction of a 5% Personal Income Tax (PIT) on high earners, effective January 1, 2028. This move positions Oman as the first country within the Gulf Cooperation Council (GCC) to implement such a tax, marking a significant step in its economic diversification strategy. The new law, promulgated by Royal Decree No. 56/2025 on June 22, 2025, aims to bolster non-hydrocarbon revenue streams and strengthen the nation's financial resilience.

Key Details of the New Tax Regime

The Personal Income Tax will apply to individuals whose annual gross income exceeds OMR 42,000, which is approximately USD 109,000. According to the Tax Authority, this threshold means that roughly 99% of Oman's population will not be subject to the new levy, effectively targeting the top 1% of earners. The tax will be imposed on various income types, including salaries, income from immovable property, and industrial or intellectual property. Tax residents, defined as Omani citizens and non-Omanis residing in Oman for 183 days or more annually, will be taxed on their worldwide taxable income, while non-resident Omani citizens will be taxed on Oman-sourced income.

Driving Economic Diversification and Vision 2040

The introduction of the PIT is a core component of Oman's broader fiscal reforms and aligns with the objectives of Oman Vision 2040. This national strategy seeks to reduce the country's heavy reliance on oil and gas revenues, which can account for up to 85% of public income, by diversifying its economic base. Minister of Economy Said bin Mohammed Al-Saqri emphasized that the tax 'will further prioritize financial stability by diversifying revenue sources' and help 'mitigate risks associated with reliance on oil as the primary revenue source.' The tax is projected to generate approximately RO 80 million (around $208 million) in its inaugural year, contributing an estimated 0.1% to Oman's GDP, and will also support social protection programs.

Exemptions, Deductions, and Implementation

To ensure fairness and social responsibility, the legislation includes a range of exemptions and deductions. These may cover:

• Education expenses
• Healthcare expenses
• Zakat and charitable donations
• Interest on loans for the acquisition or construction of a main residence
• Income earned outside Oman (one-time for two years)
• Capital gains on the sale of primary and secondary residences
• Income from inheritance and gifts
• Income from industrial property rights

Executive regulations detailing the full scope of the law's implementation are expected to be published within one year of the law's appearance in the Official Gazette. An electronic system has been developed to facilitate voluntary compliance and ensure accurate income assessments, linking with relevant institutions.