Oman to Introduce First-Ever Personal Income Tax on High Earners from 2028

In a historic move toward fiscal reform, Oman has enacted its first-ever Personal Income Tax Law, scheduled to take effect from January 1, 2028. The new policy will impose a 5% levy on individuals earning more than OMR 42,000 annually, impacting only the top 1% of the population.

The law was issued under Royal Decree No. 56/2025 by His Majesty Sultan Haitham bin Tarik, as part of the Sultanate’s broader economic diversification efforts aligned with Oman Vision 2040.

Fiscal Shift with Minimal Public Impact

According to the Tax Authority, around 99% of Oman’s residents will remain unaffected due to the high exemption threshold. The government aims to strike a balance between fiscal discipline and social equity, integrating exemptions for education, healthcare, housing, zakat, and charitable donations.

“This is a progressive step toward a sustainable economy,” said Karima Mubarak Al Saadi, Director of the Personal Income Tax Project. “Infrastructure, legislation, and taxpayer education are already underway.”

Key Details of the New Tax Law

• Effective Date: January 1, 2028

• Tax Rate: 5% on income above OMR 42,000 annually

• Exemptions: Social spending, healthcare, education, donations, zakat

• Coverage: Approx. 1% of the population

• Goal: Diversify revenues, reduce oil dependency, improve credit ratings

The 76-article law spans 16 chapters and will be accompanied by executive regulations within 12 months of publication. Authorities are also launching an electronic tax compliance system to ensure accuracy, reduce evasion, and promote voluntary filing.

Boost to Oman’s Economic Credibility

The tax complements Oman’s efforts to increase non-oil revenues to 18% of GDP by 2040 and strengthen fiscal stability. In 2024, Oman collected OMR 1.4 billion from corporate tax, VAT, and excise taxes. The personal income tax is expected to improve global investor confidence and contribute to long-term budget sustainability.

As Gulf states move toward diversified revenue models, Oman becomes the first among its peers to introduce personal income tax, a shift that could influence policy decisions across the region.