🇴🇲 Oman to Introduce Personal Income Tax in 2028

Oman is making history by becoming the first Gulf country to introduce a personal income tax, set to take effect at the beginning of 2028. This major fiscal reform reflects the Sultanate’s broader efforts to reduce dependence on oil revenue and diversify its economy under the Oman Vision 2040 strategy.

This move is part of Royal Decree No. 56/2025, introducing the Personal Income Tax Law, which will be gradually implemented and enforced starting January 1, 2028.

Key Highlights of Oman Personal Income Tax 2028

• Flat Tax Rate: A 5% tax will be levied on individuals earning more than 42,000 OMR per year (approximately Dh400,000 or USD 109,000).

• Who Will Be Taxed: Only high-income earners—roughly the top 1% of Omani residents—will be affected.

• Exemptions & Deductions: The law allows deductions for education, healthcare, housing, family dependents, charitable donations (zakat), and inheritance.

• No Burden for Middle/Lower Class: Individuals earning below the tax threshold will not be affected, ensuring the policy supports economic equity.
  
  

  Why Is Oman Introducing Personal Income Tax?

  The implementation of Oman personal income tax 2028 is not just a revenue-raising measure. It’s part of a long-term fiscal plan to ensure sustainability in public finances and reduce over-reliance on hydrocarbons.

  Key Goals Include:

  • Revenue Diversification: Currently, oil and gas contribute to over 80% of Oman’s national revenue. Income tax is a step toward more balanced revenue sources.

  • Debt Management: The government aims to use new tax revenue to manage debt levels and maintain financial stability.

  • Global Confidence: Creating a robust tax system helps strengthen Oman’s creditworthiness and attract foreign investment.
    
    
    

    Regional Significance

    The tax marks a first in the GCC (Gulf Cooperation Council), where personal income has long been tax-free. With Oman setting the precedent, other Gulf nations may observe its impact closely.

    While Saudi Arabia and the UAE have implemented VAT and corporate taxes, neither has yet imposed personal income taxes. Oman’s implementation could influence similar moves across the region in the next decade.
    
    
    

    Timeline & Implementation

    Omani authorities have allowed a long lead time before the law takes effect, giving residents, businesses, and investors time to prepare.

    • 2025: Royal Decree issued with law framework.

    • 2026–2027: Taxpayer education, system setup, and public outreach.

    • 2028: Law goes live—tax applies to income earned from January 1, 2028.

    Authorities have already begun preparatory work, including creating IT systems, taxpayer databases, and drafting clear regulations. A full exemption is expected for incomes under OMR 2,500 per month, further protecting the working class.
    
    

    What You Should Do Now

    If you’re a resident of Oman or planning to work or invest in the country:

    1. Evaluate your income levels: If you earn near or above the threshold, begin tax planning now.

    2. Seek professional advice: Tax consultants can guide you through compliance and optimization strategies.

    3. Employers: Begin reviewing HR and payroll systems and employee contracts.
       
       

       The introduction of Oman personal income tax in 2028 is a bold, forward-looking reform aimed at building a sustainable, diversified economy. While it affects only the highest earners, its implications are broad—marking a shift in how Oman manages its economy and signaling a new era in GCC taxation policy.

       With enough lead time and a socially responsible structure, Oman’s personal income tax law aims to drive fiscal responsibility without burdening everyday citizens. As the region watches closely, this move may very well be the beginning of a wider trend across the Gulf.