Tax Reforms to Drive Oman’s Revenue Growth: Key Impacts for Investors and Business Owners
MUSCAT, JAN 18 — Tax revenues in Oman are expected to increase to RO 2.531 billion by 2030, up from the estimated RO 1.990 billion in 2026. This growth reflects the Omani government’s commitment to diversifying its revenue sources, alongside the effects of ongoing tax reforms and administrative modernization efforts.
The International Monetary Fund (IMF) has commended several of these reforms. In its 2025 Article IV Consultation, the IMF praised the restructuring of the Oman Tax Authority (OTA), the introduction of advanced compliance risk management tools, and preparations for implementing a Personal Income Tax (PIT) on high-income earners starting in 2028.
The IMF reported a 3 percent increase in tax revenues in the third quarter of 2025, attributed to a rise in registrant numbers and improved compliance. Key initiatives driving this progress include the establishment of a comprehensive taxpayer registry, implementation of risk-based compliance measures, and upgrades to IT systems to close collection gaps. The rollout of e-invoicing is expected to be completed by the end of 2026, accompanied by interim improvements in human capital and processes aligned with IMF recommendations.
Currently in its third year, Oman’s four-year Tax Administration Modernisation Programme includes plans to create a dedicated Compliance Risk Management Unit within the restructured OTA. However, the IMF emphasizes that sustaining these revenue gains will require accelerated efforts to strengthen OTA staffing, modernize IT infrastructure, complete the taxpayer registry, enhance performance monitoring, and fully operationalize risk-based compliance. The timely introduction of VAT e-invoicing in 2026 and expansion of the digital tax stamp are also critical to improving compliance and collections.
A cornerstone of Oman’s evolving tax framework is the new Personal Income Tax (PIT) law, set to take effect in 2028. The IMF estimates PIT will generate revenues amounting to approximately 0.3 percent of non-hydrocarbon GDP in its early years, describing this reform as a milestone in revenue diversification and fiscal sustainability aligned with Oman Vision 2040.
The PIT imposes a 5 percent tax on net annual income exceeding RO 42,000 (around $109,000), affecting roughly the top 1 percent of earners. It covers income from employment, self-employment, investments, and capital gains (excluding the primary residence), with deductions allowed for housing, education, healthcare, charitable donations, and work-related expenses. Residents are taxed on global income, while non-residents are taxed on Oman-sourced income.
The IMF highlighted that by targeting high-income earners and incorporating socially oriented deductions, the PIT enhances tax progressivity, improves perceptions of fairness, and reduces fiscal vulnerability to fluctuations in oil prices.
In addition, Oman has adopted Pillar Two-aligned rules from 2025, including the Qualified Domestic Minimum Top-up Tax (QDMTT) and the Income Inclusion Rule (IIR). These rules apply to large multinational enterprises—typically those with global revenues exceeding €750 million—and aim to ensure an effective minimum tax rate of 15 percent in every jurisdiction.
Under the QDMTT, if a multinational’s effective tax rate in Oman is below 15 percent, the OTA can impose a domestic “top-up” tax. The IIR enables Oman to tax an Omani parent company on profits earned by its low-taxed foreign subsidiaries.
To further align tax policy with broader fiscal objectives, a dedicated Tax Policy Unit is planned within the Ministry of Finance. This unit will coordinate closely with the OTA to guide ongoing tax reforms in the interim.
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Oman’s progressive tax reforms, including the introduction of Personal Income Tax targeting high earners in 2028 and enhanced compliance mechanisms, signal a strategic shift towards fiscal diversification and sustainability beyond oil dependency. For businesses and investors, this underscores the importance of proactive tax planning and compliance readiness, especially for multinationals affected by the new minimum tax rules. Smart entrepreneurs should also consider leveraging the evolving regulatory landscape to innovate service offerings in tax advisory, compliance technology, and financial planning to capitalize on emerging opportunities.
