Oman income tax sets new precedent

THE BALL IS NOW IN THE GCC COURT - WILL OTHER NATIONS FOLLOW SUIT OR PRESERVE TAX-FREE STATUS?

- BY JUSTIN VARGHESE

In a region long known for its tax-free personal income policies, Oman's decision to roll out a personal income tax from January 2028 has sent ripples across the GCC.

The new tax, set at 5 per cent, will only apply to residents and citizens earning more than 42,000 Omani riyals annually - or just 1 per cent of Oman's population, based on average income levels.

The announcement marks a historic policy shift for Oman as it aims to diversify public revenue under its long-term fiscal plan, Oman Vision 2040.

What does Oman’s tax policy look like?

The structure of Oman’s income tax includes a range of exemptions and deductions — such as relief for health care, education, charitable giving, housing loans, and even income earned overseas (temporarily). The tax applies only to net income after all deductions and exemptions are applied.

The new tax is a major milestone in the sultanate’s efforts to reduce dependence on oil and gas, which currently make up 68 per cent to 85 per cent of total public revenue, depending on market prices.