Oman will introduce a personal income tax of 5% on individuals earning more than OMR42,000 annually, starting in 2028. The move marks the first time the Sultanate will tax individual income, positioning it alongside other Gulf states that are pursuing fiscal reform amid efforts to reduce their reliance on oil.
The tax was outlined in Royal Decree No. 56/2025 and forms part of a 76-article law spanning 16 chapters. It applies only to natural persons with income above the threshold and is limited to specific income categories defined by the legislation.
Oman’s Tax Authority stated that the law aligns with the objectives of Vision 2040, which aims to increase non-oil revenue to 15% of GDP by 2030 and 18% by 2040. The tax is also intended to support the state budget and contribute to financing the national social protection system.
The Authority stated that approximately 99% of the population would be exempt from the levy, based on data from government income records. The threshold was set after assessing economic and social impacts, and the law includes deductions related to education, healthcare, inheritance, zakat, and housing.
The Authority is also developing guidance manuals and has trained tax officers through specialised programmes.
The executive regulations for the law will be issued within one year, according to the Tax Authority.
The tax law positions Oman as the second Gulf Cooperation Council (GCC) state after Kuwait to propose direct taxation on personal income. However, unlike broader global models, the structure focuses narrowly on top-income earners, maintaining the region’s commitment to low taxation while meeting fiscal sustainability targets set by the IMF and other advisory bodies.
According to the IMF’s 2024 Article IV report on Oman, non-oil revenues grew by 6% in 2023, and further reforms are needed to insulate the budget from oil price volatility. Personal income tax was among the medium-term fiscal tools identified.
