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Business Standard
2 days ago
- Business
- Business Standard
Oman to become 1st Gulf state to levy income tax, aims to cut oil reliance
Oman will become the first Gulf state to introduce a personal income tax from January 2028. The new legislation imposes a 5 per cent tax on individuals earning more than 42,000 Omani rials (approximately $109,000) annually. According to a Bloomberg report citing the state-run Oman News Agency, the measure will impact only around 1 per cent of the population. The policy is part of Oman's broader efforts to reduce its dependence on oil income. Minister of Economy Said bin Mohammed Al‑Saqri stated that the tax was introduced 'to reduce dependence on oil revenue while preserving social spending'. While income tax is standard globally, none of the six Gulf Cooperation Council (GCC) nations currently impose it. Oman's decision breaks with regional norms and signals a major policy shift. Fiscal reform with wider Gulf implications 'While the scope is narrow, it will still be a significant fiscal development in the region,' said Monica Malik, Chief Economist at Abu Dhabi Commercial Bank. 'Oman is looking to progress with fiscal reforms while still remaining competitive. This is especially at a time when high‑net‑worth individuals are moving to the region.' The International Monetary Fund has also cautioned that GCC states may eventually require income taxes as global energy transitions put long-term pressure on oil-dependent budgets. Part of Oman 'Vision 2040' The income tax, formalised through Royal Decree No. 56/2025, supports Oman Vision 2040 — a national agenda to diversify the economy and ensure long-term financial sustainability. The Tax Authority stated that the initiative aims to 'expand income sources and enhance fiscal sustainability', while contributing to wealth redistribution and bolstering the social protection system. Officials said the policy was shaped by a thorough study of income data from government departments. Findings showed that 99 per cent of citizens fall below the tax threshold and will remain unaffected. Deductions tied to social priorities The law will allow for deductions and exemptions based on social criteria, including spending on education, healthcare, housing, inheritance, zakat, and charitable contributions. Karima Mubarak Al Saadi, Director of the Personal Income Tax Project, said Oman is fully prepared for the rollout. 'All requirements for implementing the tax are in place,' she said, noting that executive regulations will be issued within a year. Digital compliance and public readiness An integrated digital system has been developed to encourage voluntary compliance and accurately assess income. This platform will interface with existing government databases to improve transparency and efficiency. Educational materials and public engagement initiatives will be released in phases. 'Training, infrastructure, and legal frameworks are already in place,' Al Saadi confirmed. Strengthening investor confidence and fiscal health In 2024, Oman collected OMR 1.4 billion through corporate tax, VAT, and selective levies. The addition of personal income tax is expected to broaden revenue streams and enhance investor confidence by improving fiscal credibility. 'Oman's income tax could act as a catalyst for other GCC countries implementing the tax as well in the future,' Malik noted.
Time of India
2 days ago
- Business
- Time of India
Oman income tax: 5% levy on high earners from 2028; 99% population to remain unaffected
Oman to introduce first income tax for high earners from 2028 (Image credits: ANI) Oman announced the introduction of personal income tax, targeting high-income individuals, as part of a broader fiscal reform initiative under its Vision 2040 strategy. The new tax, first in the history of Oman, will take effect from January 1, 2028, and impose a 5 per cent levy on individuals earning more than OMR 42,000 per year. The measure was formally issued under Royal Decree No. 56/2025 by Sultan Haitham bin Tarik and marks a significant step towards economic diversification. Karima Mubarak Al Saadi, director of the personal income tax project, said that infrastructure, training, and legal frameworks are already in place, reported ANI. She added that awareness and educational guides for individuals and businesses will be rolled out in stages ahead of the law's implementation. All you need to know about Oman's new income tax The new law includes 76 articles across 16 chapters, clearly defining taxable income categories. It also outlines social exemptions for essential expenses such as education, housing, healthcare, zakat, and donations, ensuring fairness and shielding low- and middle-income earners from additional financial burden. According to the nation's tax authority, the exemption threshold has been deliberately kept high to ensure that about 99 per cent of Oman's population remains unaffected by the tax. The primary objective of the new personal income tax is to increase the contribution of non-oil revenues to Oman's GDP, which the government aims to raise to 18 per cent by 2040. To facilitate implementation, Oman is building a modern electronic tax system that will link government databases for accurate income reporting and improved compliance. The executive regulations for the new law will be issued within a year of its publication in the Official Gazette. Other goals include improving fiscal stability, supporting public welfare programs, and enhancing the country's credit ratings. In 2024, Oman collected OMR 1.4 billion in corporate, VAT, and selective taxes. The addition of personal income tax is expected to strengthen the nation's fiscal position and enhance its appeal to global investors. This move also reflects a broader regional shift in the Gulf, where countries are seeking to build more sustainable and resilient economies by reducing dependence on oil income. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
