Oman to impose first personal income tax for high earners, effective January 2028

Muscat/Dubai: Oman has officially enacted its first Personal Income Tax Law, with implementation set for January 1, 2028, marking a historic policy shift aimed at fiscal diversification and economic sustainability under Vision 2040.

The new law, issued by Royal Decree No. 56/2025 by Sultan Haitham bin Tarik, will apply a 5% tax rate on individuals earning over OMR 42,000 annually. This high exemption threshold means approximately 99% of Oman’s population will not be affected, according to the Tax Authority.

Comprising 76 articles across 16 chapters, the law will target specific income sources while integrating social exemptions—such as education, housing, healthcare, zakat, and donations—to ensure fairness and social justice. The move complements Oman’s long-term fiscal consolidation strategy and aims to increase non-oil revenues to 18% of GDP by 2040.

The law’s executive regulations will be issued within a year of publication in the Official Gazette. The Tax Authority is also deploying an electronic tax compliance system, integrating government databases to ensure accuracy in declarations and promote voluntary compliance.

Karima Mubarak Al Saadi, Director of the Personal Income Tax Project, noted that training, infrastructure, and legal frameworks are already in place. Educational guides for individuals and businesses will be rolled out in phases ahead of the law’s implementation.

Last year, Oman collected OMR 1.4 billion from corporate, VAT, and selective taxes. The personal income tax is expected to complement these revenues and bolster fiscal credibility, enhancing Oman’s appeal to global investors.

This landmark policy comes amid a regional trend of Gulf economies moving toward diversified revenue models as they reduce dependency on oil.