Muscat – Oman will introduce a 5% personal income tax on high-income earners starting January 2028, marking a major step in the sultanate’s fiscal reform plans to diversify revenue and reduce reliance on oil.

Under the Personal Income Tax Law issued via Royal Decree No 56/2025, the tax will apply to individuals earning more than RO42,000 annually.

Tax Authority stated that the new tax aligns with Oman’s economic and social context and supports the objectives of Oman Vision 2040 by expanding income sources and enhancing fiscal sustainability. It also aims to promote wealth redistribution and finance part of the social protection system.

Officials stressed that the tax framework was developed following a detailed study of its potential economic and social effects, based on income data from various government entities. The findings showed that about 99% of citizens will not be affected due to the high exemption threshold and the modest 5% rate.

The law also provides deductions and exemptions for social factors, covering areas such as education, healthcare, primary housing, inheritance, zakat and donations.

Karima Mubarak al Saadi, Director of Personal Income Tax Project, confirmed that all requirements for implementing the tax are in place. Executive regulations will be issued within a year of publication in the Official Gazette.

She added that the Tax Authority has developed an electronic system to encourage voluntary compliance and ensure accurate income verification in coordination with relevant departments.

Introduction of the tax is part of Oman’s broader strategy to strengthen public finances, enhance social justice and support sustainable economic growth.