Oman Announces Historic Personal Income Tax from 2028, A GCC First

MUSCAT, OMAN – June 26, 2025 – Oman will implement a personal income tax (PIT) starting January 1, 2028, becoming the first Gulf Cooperation Council (GCC) nation to introduce direct taxation on individual earnings. This landmark decision ends the region's decades-long tradition of zero personal income tax.

Key Features of the Tax System

• High-Income Focus: Only applies to annual earnings above 100,000 Omani Rials (~$260,000)
• Progressive Structure: Tiered rates for income exceeding the threshold (rates TBD 2026/2027)
• Extended Preparation: 2.5-year implementation window for system readiness
• Revenue Allocation: Funds to support Vision 2040 development goals in healthcare, education and infrastructure

Strategic Rationale

The move addresses Oman's reliance on hydrocarbon revenues (85% of state budget), accelerated by oil price volatility. Finance Ministry officials position this as essential for:

• Diversifying government income
• Funding social services amid energy transition pressures
• Building fiscal resilience post-2020 oil crash

This follows Oman's 2021 VAT introduction, but marks a more significant shift by directly taxing individual earnings – a policy avoided by neighboring GCC states.

Regional Implications

The announcement triggers regional debate as Oman diverges from core GCC tax principles:

• UAE/Kuwait immediately reaffirmed no PIT plans
• Saudi Arabia maintains corporate taxes but protects individual income
• Analysts suggest long-term pressure on neighbors may increase
• Potential competitive shifts in expatriate recruitment anticipated

Initial Reactions

Financial Sector: Concerns about skilled expatriate retention and consumer spending
Government Assurance: "Vast majority unaffected" due to high threshold

Next Steps

Critical milestones before 2028 implementation:

1. Legislative framework finalization (2026-2027)
2. Tax authority establishment
3. Public awareness campaigns
4. Financial system integration

Oman's pioneering move signals a fundamental reorientation toward post-oil economic governance, with the GCC watching closely as this unprecedented fiscal transformation unfolds.

Considering relocation? One World provides expert guidance on Oman residence permits and tax-efficient relocation planning.