Oman to introduce personal income tax from 2028; is Dubai next?

Oman is set to become the first country in the Gulf region to introduce a personal income tax, beginning in 2028. According to the state-run Omani News Agency, as reported by Bloomberg, the planned 5% levy will apply only to annual incomes exceeding 42,000 rials (approximately $109,000), impacting just the top 1% of earners.

Oman introduces personal income tax system

Minister of Economy Said bin Mohammed Al-Saqri explained that the new tax is part of broader efforts to diversify Oman’s revenue streams and lessen the country’s dependence on oil, all while maintaining government spending on social programs.

This move represents a notable policy shift in the Gulf, where none of the six Gulf Cooperation Council (GCC) member states currently impose income tax. The long-standing tax-free status has historically been a magnet for highly paid expatriates, making Oman’s decision particularly significant within the region.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, told Bloomberg that although the scope of the tax is limited, it marks an important fiscal milestone. “Oman is moving forward with financial reforms while aiming to remain economically attractive—especially at a time when high-net-worth individuals are relocating to the Gulf,” she said.

While most GCC nations maintain relatively strong fiscal positions—with only Saudi Arabia and Bahrain expected to post budget deficits this year—the International Monetary Fund has previously suggested that income taxation may eventually be necessary across the region as global fossil fuel demand declines.

Oman’s move fits into its wider reform agenda aimed at reducing its reliance on oil revenues. The country has also pursued privatisation as a revenue-raising strategy, most notably with a record $2 billion IPO of the state energy company’s exploration and production arm last year.

Malik noted that Oman’s tax initiative could potentially influence other Gulf nations to explore similar policies in the years ahead, setting a precedent for gradual economic transformation across the GCC.