Daijiworld Media Network - Muscat

Muscat, Jun 26: Oman will become the first Gulf nation to implement personal income tax, starting in 2028. The 5% tax will apply to individuals earning over 42,000 rials ($109,000) annually, targeting the top 1% of income earners, according to the state-run Omani News Agency, as reported by Bloomberg.

The move marks a significant policy shift in a region where income has traditionally not been taxed. Oman’s minister of economy, Said bin Mohammed Al Saqri, stated that the tax aims to reduce the country’s dependence on oil revenues while ensuring continued investment in public services and social programmes.

Economists have highlighted the step as a critical part of Oman’s broader fiscal reform. Monica Malik, chief economist at Abu Dhabi Commercial Bank, called it a ‘fiscally important’ measure, noting it reflects Oman’s attempt to modernize its economy without weakening its competitiveness in the region.

The International Monetary Fund (IMF) has suggested that other Gulf Cooperation Council (GCC) countries may follow suit, especially as global reliance on fossil fuels wanes. While most GCC nations currently enjoy strong public finances, only Saudi Arabia and Bahrain are projected to post budget deficits this year.

Oman has already begun diversifying its economy through asset sales and privatisation. In 2023, it raised a record $2 billion from the listing of its state energy company’s exploration and production arm.