INTERNATIONAL: Oman to Introduce Gulf’s First Income Tax in 2028
Historic Fiscal Reform
Oman is set to become the first Gulf Cooperation Council (GCC) nation to introduce a personal income tax, effective January 2028. The 5% levy will target individuals earning above 42,000 Omani rials ($109,000) annually, affecting approximately 1% of the population. This landmark decision marks a significant shift in the region’s fiscal landscape.
Diversifying Revenue Streams
Driven by a need to reduce reliance on crude oil, Oman’s government aims to bolster non-oil revenue under its Vision 2040 economic diversification plan. The income tax initiative responds to global declines in fossil fuel demand, as highlighted by the International Monetary Fund (IMF). Finance Minister Bin Mohammed Al Sakhri emphasized that the revenue will fund public welfare programs.
Targeting High Earners
The tax will apply exclusively to the top 1% of earners, ensuring minimal impact on the broader population. This progressive approach aims to balance fiscal reform with economic inclusivity. Oman’s strategy is seen as a potential blueprint for other GCC nations facing similar economic pressures.
Regional Economic Context
GCC countries, historically reliant on oil wealth, face looming fiscal challenges, with Saudi Arabia and Bahrain projected to encounter deficits in 2025. The IMF advocates for structural reforms like income taxation to ensure long-term fiscal stability. Oman’s move could catalyze similar policies across the region.
Global Implications
The absence of income tax has long attracted wealthy expatriates to the Gulf, but Oman’s policy shift may influence migration patterns. Economists suggest that other GCC nations may follow suit, gradually adopting income tax to diversify revenue. This could reshape the region’s economic appeal over time.
Strategic Vision
Oman’s initiative aligns with its Vision 2040 goals, prioritizing sustainable economic growth and reduced oil dependency. The tax revenue is expected to enhance public services, including healthcare and education, fostering long-term societal benefits. The policy underscores Oman’s proactive approach to global economic trends.