Muscat: In a historic shift within the Gulf region, Oman will become the first Gulf Cooperation Council (GCC) country to implement a personal income tax, marking a significant departure from the region’s traditionally tax-free approach to individual earnings. Starting in 2028, individuals earning more than 42,000 Omani riyals annually (approximately AED 400,000) will be subject to a 5% income tax.
The reform, formalized under Royal Decree No. 56/2025 through the newly introduced Personal Income Tax Law, is part of Oman’s broader economic diversification strategy. The goal is to reduce the Sultanate’s reliance on oil revenues and expand sustainable fiscal resources — a key objective under Oman Vision 2040.
This move sets Oman apart from its Gulf neighbors, none of whom have yet imposed a personal income tax. While countries like the UAE and Saudi Arabia have adopted VAT, corporate tax, and excise duties on tobacco and sugary drinks, Oman now leads the region in establishing a tax on individual incomes.
Karima Mubarak Al Saadi, director of the Personal Income Tax Project, confirmed via the Oman News Agency that all administrative and legal preparations for implementation are complete. The law will officially come into force at the beginning of 2028.
Importantly, the legislation incorporates multiple social exemptions and deductions, reflecting a commitment to equity and public welfare. Exempted categories include spending on education, healthcare, primary housing, inheritance, zakat, and charitable donations.
A comprehensive study conducted before the law’s drafting revealed that nearly 99% of Oman’s population falls below the income threshold and will not be taxed. This ensures the burden will only apply to the country’s highest earners, safeguarding middle- and lower-income groups.
Tax expert Thomas Vanhee, founding partner of Aurifer Middle East Tax Consultancy, stated that the tax will apply uniformly to residents, regardless of nationality. “Oman is now the first GCC country to legislate a personal income tax regime, distinguishing itself from other Gulf jurisdictions like the UAE, Qatar, and Saudi Arabia. This reflects a broader IMF-guided diversification strategy,” he explained.
Vanhee added that the tax’s structure is progressive, with a conservative rate of 5% relatively modest by international standards and noted that the extended timeline gives individuals and institutions adequate time to prepare.
Source: KT