Oman has announced that it will implement a 5 percent personal income tax (PIT) on high earners starting January 1, 2028, becoming the first GCC country to introduce such a tax. The move aligns with Oman Vision 2040’s strategic objective of diversifying revenue sources and ensuring long-term financial stability.
New Tax Targets High Earners
The Personal Income Tax Law, issued under Royal Decree No. 56/2025, introduces a flat 5 percent tax on individuals earning more than OMR 42,000 ($109,100) annually. The law contains 76 articles across 16 chapters and covers a range of income categories detailed within the legislation.
The tax will not impact the majority of citizens. According to the Tax Authority, an estimated 99 percent of Omanis are exempt, based on comprehensive studies of income data from multiple government agencies.
Key Details: Oman’s Personal Income Tax
- Start Date: January 1, 2028
- Threshold: Income above OMR 42,000 ($109,100) per year
- Rate: 5 percent flat tax
- Exemptions: 99% of Omani citizens; deductions for education, healthcare, housing, zakat, and donations
- Purpose: Enhance fiscal sustainability, social equity, and reduce oil dependency
- Impact: Minimal GDP impact and no expected deterrent to foreign investment
Designed for Fiscal Reform and Equity
Speaking on the significance of the tax, Dr. Said Mohammed Al Saqri, Minister of Economy, stated:
“The tax provides a new stream of revenue, reducing reliance on oil and preserving our economic achievements. It supports social spending while aligning with Oman Vision 2040 and the goals of the Tenth Five-Year Plan (2021–2025).”
To support fairness, the law includes deductions covering basic social needs such as education, healthcare, and housing, alongside zakat, charitable donations, and inheritance.
Karima Mubarak Al Saadi, Director of the PIT Project, confirmed that all preparatory steps have been completed. A digital tax filing system is also ready, designed to ensure seamless integration with other government systems and encourage voluntary compliance.
No Impact on Foreign Investment
Currently, 68 to 85 percent of Oman’s revenue comes from oil and gas, depending on market conditions. While recent prices have been favourable, the government highlighted the risk of future volatility. The PIT initiative offers a buffer by creating a more stable revenue model.
Dr. Al Saqri noted that over 190 countries impose personal income tax, often using it as the main source for funding public services. He emphasized that Oman’s tax model, focused solely on individuals—not corporations—will not deter foreign investment, especially given its globally competitive structure.
Social Services to Benefit from New Revenue
In 2025, Oman’s national budget allocated more than OMR 5 billion ($13 billion) toward essential services:
- Education: 39%
- Healthcare: 24%
- Social Protection: 28%
The Social Protection Fund currently assists over 2 million beneficiaries each month. The anticipated PIT revenue is expected to further enhance the fund’s capacity, bolstering Oman’s welfare ecosystem.
The executive regulations for the law will be issued within one year of its publication in the Official Gazette.
