Oman to introduce 5% income tax on high-income individuals
Exemptions include housing, healthcare, education, and charitable donations
DUBAI: Oman is poised to make regional history by becoming the first Gulf Cooperation Council (GCC) country to implement personal income tax.
The Sultanate will impose a 5% tax on individuals earning more than OMR 42,000 annually (approximately Dh400,000), starting January 1, 2028.
The Personal Income Tax Law was issued under Royal Decree No. 56/2025 by Sultan Haitham bin Tarik, marking a milestone in Oman’s Vision 2040 goals to diversify revenue streams and ensure long-term fiscal sustainability.
Officials emphasise that the tax targets only the top 1% of earners in Oman, with the exemption threshold set deliberately high. According to the country’s Tax Authority, 99% of residents will not be affected. Deductions will apply for critical expenses such as healthcare, education, housing, zakat, and charitable donations.
Oman income tax law
Karima bint Mubarak Al Saadi, Director of the Personal Income Tax Project, confirmed that implementation infrastructure is in place. The tax law, consisting of 76 articles across 16 chapters, applies equally to citizens and expatriates.
An advanced electronic compliance system has been developed to connect with government databases, enabling accurate income calculation and reducing the chances of underreporting. Regulations will be issued within a year, and guidance manuals will be gradually released to help residents understand their obligations.
Experts say the 5% rate is low by global standards, and the high-income threshold reflects a progressive approach aimed at safeguarding middle- and low-income segments.
Revenue diversification
The new law is expected to reinforce Oman’s public budget without disrupting economic momentum. In 2024, non-oil revenues, including VAT and corporate taxes, reached OMR 1.4 billion. Oil and gas still contribute up to 85% of state income, making diversification efforts crucial.
Dr. Said Mohammed Al Saqri, Minister of Economy, stated that personal income tax is a standard fiscal tool globally, used by over 190 countries to finance public services. The measure is part of a broader policy to stabilise Oman’s financial position, boost credit ratings, and sustain GDP growth beyond oil dependence.
Authorities say a detailed study evaluated the tax’s likely impact across 18 sectors and GDP, finding minimal effect – less than 1 percent. Foreign investment is not expected to be affected, since the tax is limited to individuals.
As Oman nears the end of its Tenth Five-Year Plan, this income tax represents a key step in anchoring financial stability, enhancing public services, and supporting a fairer wealth distribution system.