Oman becomes first country in Gulf to impose income tax

IANS June 23, 2025 243 views

Oman has made history as the first Gulf nation to introduce a personal income tax, set at 5% for high earners from 2028. The move targets only the wealthiest 1% while keeping the country attractive to foreign workers compared to tax-free neighbors. Officials say this will help reduce Oman's heavy reliance on volatile oil revenues, which currently make up 68-85% of income. The tax aligns with Oman Vision 2040's goals of economic diversification and long-term fiscal stability.

"The tax serves as a new revenue stream to diversify public income sources and mitigate risks associated with reliance on oil." – Said bin Mohammed Al-Saqri
Dubai, June 23: : Oman has become the first country in the Gulf region to impose a personal income tax to mobilise more funds for economic development.

Key Points

1

Oman targets top 1% earners with 5% tax from 2028

2

Move aims to reduce 68-85% oil revenue dependency

3

GCC nations like UAE, Saudi remain tax-free

4

Aligns with Oman Vision 2040 fiscal stability goals

The 5 per cent tax will kick in from January 2028 and only applies to annual income of 42,000 rials ($109,000). The move will bring into the tax ambit only the top 1 per cent earners, the state-run Omani News Agency has reported.

There is no other country in the 6-member Gulf Cooperation Council that imposes income tax. This tax-free status is considered a positive by foreign workers in countries like Saudi Arabia, the United Arab Emirates, and Qatar.

Oman’s Minister of Economy, Said bin Mohammed Al-Saqri, said the measure will reduce reliance on oil income by diversifying public revenue while maintaining social spending.

The Ministry of Economy affirmed that the implementation of the Personal Income Tax (PIT), set to take effect at the beginning of 2028, represents a crucial step toward enhancing financial stability and completing the fiscal sustainability framework. This measure aims to ensure sustainable financing for development across various sectors.

The minister said: "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. It will help maintain current levels of social and service spending while preserving Oman’s achievements in financial and economic stability under 'Oman Vision 2040' and its first executive phase, the Tenth Five-Year Plan (2021-2025)."

He said that implementing the tax in Oman will yield significant economic benefits, supporting income diversification strategies and long-term fiscal stability as a pillar of economic growth. It will also sustain government revenues, strengthen the state’s financial position, maintain credit ratings, and boost spending power for beneficiaries, directly stimulating aggregate demand and economic growth.

The minister highlighted that oil and gas revenues account for 68 per cent to 85 per cent of Oman’s total public income, depending on global energy prices. While oil prices have stabilised at favourable levels in recent years, they remain volatile. Oman has effectively managed additional oil revenues by reducing public debt to safe GDP ratios, increasing investment and social spending, and subsidising essential goods and services.

Reader Comments

R
Rajesh K.
Interesting move by Oman! Gulf countries have always been tax havens for high earners. 5% on income above $109k is still very reasonable compared to what we pay in India. Hope this helps their economy diversify from oil dependence. 👍
P
Priya M.
Many Indians working in Gulf may reconsider options now. The tax-free salary was a major attraction. But honestly, 1% of top earners won't make much difference. Most Indian workers there earn much less than this threshold.
A
Arjun S.
Smart economic planning by Oman! Relying 85% on oil revenue is risky with climate change concerns. India should learn from this - we need more stable revenue models too instead of sudden tax changes that affect common people.
S
Sunita R.
Gulf countries have had it too easy for too long with their oil money. Good to see them finally contributing to society like the rest of us. Maybe this will make them more accountable to their citizens too.
V
Vikram J.
The threshold is quite high ($109k) so this won't affect most Indian expats. But it's a worrying trend - if other GCC countries follow, our remittances might reduce. Gulf money is important for many Indian families back home.
N
Neha P.
Oman is showing maturity in economic planning. Unlike some of its neighbors who just splurge oil money on vanity projects. This measured approach will benefit them in long run. More stable economy means better opportunities for Indian workers too.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Your email won't be published


Disclaimer: Comments here reflect the author's views alone. Insulting or using offensive language against individuals, communities, religion, or the nation is illegal.

Tags:
Oman income tax Gulf Cooperation Council GCC economy Oman Vision 2040 Said bin Mohammed Al-Saqri