Oman is set to introduce income tax from 2028, becoming the first Gulf nation to do so. The 5% tax will apply to annual incomes over 42,000 rials ($109,000), targeting the top 1% of earners, quoted the state-run Omani News Agency, reported Bloomberg.

REDUCING OIL DEPENDENCE, PROTECTING PUBLIC SERVICES
Oman’s Minister of Economy, Said bin Mohammed Al Saqri, said the move will help the country rely less on income from crude oil exports while continuing to protect spending on public services and social needs.

In a region where all six Gulf Cooperation Council (GCC) members have refrained from taxing income, Oman’s decision stands out. The long-standing policy has helped lure high-income expatriates, amplifying the impact of this shift.

The International Monetary Fund (IMF) has already hinted that other Gulf nations may eventually need to introduce income tax too, especially as global demand for fossil fuels continues to decline. Although most GCC countries currently have healthy government finances, only Saudi Arabia and Bahrain are expected to run budget deficits this year.

Oman, like its neighbours, has been taking steps to prepare for the future. In recent years, it has raised money through asset sales and privatisation.

In 2023, it made headlines with a record $2 billion from the public listing of its state energy company’s exploration and production unit.