Oman to Introduce Income Tax for the First Time in Gulf Countries

The winds of change are blowing in the Gulf countries. For the first time, a country in the region has announced the introduction of income tax. Oman has decided to implement a 5% income tax starting in 2028. This decision comes as the country aims to diversify its revenue sources and reduce its dependence on oil.

The International Monetary Fund (IMF) has also predicted that in the coming years, Gulf countries will start imposing taxes on their citizens to diversify their revenues. For decades, these nations have relied heavily on oil revenues, attracting foreign investments and boosting their economies. However, the changing global energy market and the fluctuating price of oil have prompted Oman to make this significant shift.

Tax Will Apply to a Small Percentage of the Population

Initially, Oman will apply the income tax only to those citizens whose annual income exceeds $109,000. This means only about 1% of the population will be subjected to the tax. The official announcement regarding this policy was made by the Omani government on June 22. Currently, Oman’s economy heavily relies on oil, with 85% of its revenue coming from oil and gas exports.

Oman’s Vision for Economic Diversification

Despite the heavy reliance on oil, Oman is working towards reducing this dependency. The government has been contemplating the introduction of taxes for years and has already taken steps to reform the economy. In 2020, Oman implemented several changes aimed at reducing public debt and promoting economic growth. This is part of Oman’s Vision 2040, where the country plans to shift towards a technology-based economy.

The introduction of income tax is part of a broader strategy to ensure economic stability and sustainability for the future. While it is still unclear whether other Gulf countries will follow Oman’s lead, the IMF anticipates that many will implement similar measures in the coming years.