Oman becomes 1st Gulf country to impose income tax
What's the story
Oman has announced plans to impose a 5% income tax from 2028, becoming the first Gulf country to do so. The tax will be levied on people earning over 42,000 Omani rials (around ₹95 lakh) annually. This move is tipped to affect about 1% of the population and is aimed at diversifying revenue streams and reducing dependence on oil income.
Economic shift
Oman's strategy to diversify economy
The introduction of the income tax is part of Oman's broader strategy to diversify its economy and reduce public debt. The nation had launched a medium-term fiscal program in 2020, which has improved public finances. The law provides for deductions and exemptions based on social factors such as education, healthcare, inheritance, zakat (charitable donations), and primary housing.
Implementation readiness
Preparations for implementing tax completed
Karima Mubarak Al Saadi, Director of the Personal Income Tax project in Oman, said, "All necessary preparations and requirements for implementing the tax have been completed." The wait till 2028 allows for comprehensive awareness campaigns and system upgrades to ensure compliance.
Regional impact
Other Gulf states may follow suit
Monica Malik, Chief Economist of Abu Dhabi Commercial Bank, said the tax could be a "catalyst" for other Gulf Cooperation Council (GCC) countries to implement similar measures in the future. The GCC region has traditionally relied on oil revenues and does not levy income taxes. However, with the global demand for fossil fuels declining, income taxes may become necessary in these states.