Oman to become first Gulf nation with personal income tax
text_fieldsOman has announced plans to implement a personal income tax (PIT), becoming the first country in the Gulf region to take such a step. The measure, formalised through a royal decree and confirmed by the Tax Authority on Sunday, is scheduled to take effect from the beginning of 2028.
The 5% income tax will apply to individuals earning more than 42,000 Omani rials annually. The move is part of Oman’s broader strategy to diversify its economy and reduce dependency on oil revenues, a goal outlined in the Tenth Five-Year Plan and “Oman Vision 2040".
Dr. Said Mohammed Al Saqri, Minister of Economy, emphasized the tax’s long-term significance.
“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", said Dr. Said.
"It will help maintain current levels of social and service spending while preserving Oman’s achievements in financial and economic stability", he added.
The Ministry of Economy described the initiative as a key step toward enhancing financial sustainability and securing funding for development across multiple sectors.
According to Oman News Agency, Karima Mubarak Al Saadi, director of the Personal Income Tax Project, confirmed that “all necessary preparations and requirements for implementing the tax have been completed".
The law also includes several exemptions and deductions aimed at supporting citizens and respecting social priorities. These include allowances related to education, healthcare, inheritance, zakat, donations and primary housing.
Oman first introduced a medium-term fiscal plan in 2020, targeting public debt reduction and revenue diversification. While oil continues to play a central role in its economy, recent fiscal reforms have improved the country’s financial health.
The introduction of PIT marks a major shift in Gulf fiscal policy, potentially setting a precedent for neighbouring states as they navigate economic diversification amid fluctuating oil markets.