Oman Becomes First Gulf Country to Introduce Income Tax

Oman Becomes First Gulf Country to Introduce Income Tax — What It Means for Professionals & Businesses

Oman is introducing a 5% personal income tax for high-income individuals starting 1 January 2028. This is a major fiscal shift for the GCC, where personal taxes have traditionally been zero.

What’s Changing

✅ 5% income tax for individuals earning above OMR 42,000/year

✅ Applies to salaries, allowances, bonuses, rentals, dividends, and gains

✅ Both residents and non-residents are taxed on Oman-sourced income

✅ Tax residency is 183+ days in Oman annually

✅ Majority of the population remains unaffected

Why Oman Is Implementing This

✅ Reduce reliance on oil revenue

✅ Strengthen national budget

✅ Modernize fiscal and tax systems

✅ Support infrastructure & development

✅ Increase economic stability and sustainability

Impact on Professionals

✅ Only higher-income professionals are affected

✅ 5% rate remains globally competitive

✅ Oman remains attractive for specialists and executives

✅ Most expats are below the taxable threshold

Impact on Employers

✅ Payroll systems will require tax withholding

✅ Employee compensation policies may need adjustments

✅ HR teams must prepare for compliance

✅ Contract wording may change to include tax clauses

✅ Expat compensation packages may be reviewed

What to Watch Next

✅ Mid-2026: Executive regulations will clarify exemptions, deductions, and procedures

✅ 2027: System preparation & HR policy alignment

✅ 2028: Tax officially enforced

This new tax is not a burden on the average worker — it’s a targeted strategy affecting only high earners while helping Oman build a more sustainable and diversified economic future.