Oman has issued a royal decree to introduce a personal income tax, becoming the first Gulf nation to implement such a measure, its tax authority announced on June 22.

The move is part of the country’s broader efforts to diversify revenue sources and reduce reliance on oil.

As one of the smaller economies in the Gulf, Oman launched a medium-term fiscal plan in 2020 aimed at cutting public debt, expanding non-oil income streams, and supporting economic growth.

These measures have contributed to an improvement in the nation’s public finances.

Under the new law, a 5% tax will be levied on taxable income exceeding 42,000 Omani rials annually.

The tax is set to take effect in 2028 and is expected to affect roughly 1% of the population.

“The law also includes deductions and exemptions that take into account the social situation in the Sultanate of Oman, such as education, healthcare, inheritance, zakat, donations, primary housing,”

the tax authority stated.

Featured image credit: Edited by Fintech News Middle East, based on image by Anfal Shamsudeen via Unsplash