Oman announces personal income tax to diversify its economy
- Oman is set to implement a 5% income tax on individuals earning above 42,000 Omani rials starting in 2028.
- This tax marks the first personal income tax in the Gulf region, highlighting Oman's efforts to diversify its economy.
- The introduction of the tax aims to promote social justice and enhance government revenues to support the nation's budget.
Oman, located on the southeastern coast of the Arabian Peninsula, has made a groundbreaking announcement regarding taxation within the Gulf Cooperation Council, where it will introduce a personal income tax. This historic decision was communicated through a royal decree, officially revealing that the 5% tax will take effect in 2028. The income tax will apply to individual earnings exceeding 42,000 Omani rials (approximately $109,091 annually), affecting only the top earners in the country. The motivation behind this tax initiative stems from the government's ongoing struggle to diversify Oman’s revenue sources away from its heavy dependence on oil and gas, which currently constitute about 85% of the national income. As part of Oman Vision 2040, the new tax aligns with broader economic reforms aimed at achieving a more resilient and varied economy, with significant contributions from non-oil sectors. Furthermore, the introduction of an income tax is anticipated to address social justice by redistributing wealth more equitably and providing necessary funding for social welfare and protection programs. Oman’s Minister of Economy, Said bin Mohammed Al-Saqri, emphasized that the tax would create a new revenue stream, thereby supporting the national budget while reducing risks associated with global energy market fluctuations. As Oman prepares for these fiscal changes, it opens a discussion on whether other Gulf states might consider similar taxation models in the face of global economic shifts that necessitate diversification and sustainability.