Oman to introduce personal income tax; first in GCC

Manama: Oman is set to implement a personal income tax regime for individuals starting on January 1, 2028. This initiative marks one of the first instances of such a tax within the Gulf Cooperation Council (GCC) region. Taxpayers are encouraged to familiarize themselves with the new tax regulations and prepare for implementation by reviewing their financial records and obligations regarding tax compliance.

The personal income tax will apply a rate of 5% to individuals earning more than 42,000 Omani Rials (OMR 42,000, approximately BD 42,000) annually, affecting only the top 1% of earners in Oman. The new Personal Income Tax Law aims to enhance revenue generation without burdening the majority of the population. The revenue collected from this tax will be allocated to support social protection initiatives.

This decision is part of Oman’s strategy to reduce reliance on oil revenues and align with the country's long-term economic diversification goals outlined in Oman Vision 2040. According to London-based Capital Economics, "Oman’s economy has been strained by a heavy debt burden, with the ratio of public debt to GDP reaching almost 70% at its peak in 2020. Austerity measures implemented under Sultan Haitham bin Tariq Al Said, Oman’s head of state, have since reduced this ratio to around 35%."