In a historic move, Oman has announced it will impose income tax on its high-income citizens from 2028. This will make Oman the first country in the Gulf Cooperation Council (GCC) to implement such a policy. The move is part of a long-term economic strategy to reduce dependence on oil revenue and to build a sustainable public finance model.
Oman’s Economy Minister Saeed bin Mohammad Al-Saqri shared this update on June 23, 2025, during an interaction with Bloomberg. He said the government needs to diversify its revenue base to keep up social spending and reduce over-reliance on oil.
Who Will Be Taxed Under the New Law?
According to local media, the proposed income tax will be 5% and apply only to Omani citizens earning over 42,000 Omani Rial annually. This is approximately $109,000 or around ₹90 lakh in Indian currency.
This income threshold means the tax will mainly impact the top 1% of earners in Oman. For now, middle-class citizens and lower-income groups remain untouched by the tax. The government has decided to implement the tax from 2028, giving individuals and businesses enough time to prepare.
Why Is This a Landmark Decision in the Gulf Region?
Till now, no GCC country—including the UAE, Saudi Arabia, Qatar, Kuwait, and Bahrain—has imposed personal income tax on its citizens. Their economies heavily rely on oil exports and taxes collected from expatriates and foreign companies.
Oman’s decision signals a shift in policy and could become a model for other Gulf countries in the future. It shows how regional economies are beginning to accept that depending only on oil is not a long-term solution, especially as the world moves toward green energy.
IMF and Experts Welcome the Step
The International Monetary Fund (IMF) and financial experts have supported Oman’s move. According to Monica Malik, Chief Economist at Abu Dhabi Commercial Bank, “Even though the scope is limited, this is an important fiscal step in the Gulf region.”
The IMF has repeatedly advised oil-rich countries to create alternative revenue sources. With rising uncertainty in global oil prices and long-term changes in energy consumption, Gulf countries are being forced to look beyond fossil fuels.
Oman’s Efforts to Strengthen Economy
This income tax decision is just one part of Oman’s broader economic reforms. In 2024, Oman raised $2 billion through an Initial Public Offering (IPO) by selling a part of its government-run energy company. The country is trying to shift its economy from oil-focused to investment-friendly.
Oman is currently the 15th largest exporter of crude oil globally. In 2023 alone, it exported crude worth $29.3 billion to China. But the government knows this dependence is risky and wants to secure its future by introducing long-term reforms.
How Will This Impact India?
India relies heavily on crude oil from Gulf countries, including Oman. If more GCC countries adopt similar tax policies, there could be a rise in operational costs in the region. This may impact Indian businesses operating there and possibly increase living expenses for overseas Indians.
Also, Indian investors and exporters doing business in the Gulf may have to reassess their financial planning if such tax systems become common in the region.
