Oman’s Introduction of Personal Income Tax Expected to Generate RO 80 Million: What It Means for Investors and Businesses
MUSCAT: Oman is projected to generate approximately RO 80 million (around $208 million) from the introduction of Personal Income Tax in 2028, according to international ratings agency S&P Global Ratings.
Under Royal Decree 56/2025, which enacts the Personal Income Tax Law (PTIL), Oman will become the first GCC country to implement this tax, aiming to strengthen non-hydrocarbon revenue streams. The tax will apply primarily to high-income individuals, with a flat rate of 5 percent on annual earnings exceeding RO 42,000 (roughly $109,000). Taxpayers will be allowed deductions for expenses related to education, healthcare, zakat contributions, charitable donations, and other qualifying items.
S&P Global Ratings estimates that the RO 80 million revenue generated in the tax’s inaugural year will account for approximately 0.1 percent of Oman’s GDP. This will complement existing tax incomes, including corporate income tax and value-added tax (VAT), which currently represent about 14 percent of the government’s total revenue.
The agency also highlighted ongoing government efforts to enhance public finance management. Over the past five years, capital and current expenditures have been reduced by around 10 percent. Oman introduced VAT in 2021 and has made progress in implementing a treasury single account system to boost fiscal efficiency.
Looking ahead to the 2025–2028 period, S&P forecasts that Oman will maintain a net general government asset position, supported by the government’s commitment to reducing debt. Liquid assets are projected to remain around 43 to 45 percent of GDP. Gross government debt is expected to decline to 33 percent of GDP by 2028, down from 36 percent in 2024 and a post-pandemic peak of 68 percent.
The accumulation of liquid assets includes government deposits with domestic institutions and the central bank, as well as assets managed by the Oman Investment Authority (OIA), the public pension fund (SPF), and the Petroleum Reserve Fund.
S&P anticipates that Oman will sustain an average net asset position of about 8 percent of GDP through 2025–2028.
For fiscal year 2025, a slight deficit of 0.5 percent of GDP is expected, compared to a 1.5 percent surplus in 2024. This change reflects the agency’s Brent crude oil price assumptions of $60 per barrel for the latter half of 2025 and $65 per barrel from 2026 to 2028, compared to $81 per barrel in 2024. S&P expects Oman’s fiscal balance to stabilize between 2026 and 2028, driven by moderate increases in oil and gas production alongside continued government expenditure efficiency efforts.
Special Analysis by Omanet | Navigate Oman’s Market
The introduction of a 5% Personal Income Tax on high earners by 2028 marks a strategic shift for Oman, opening new revenue streams beyond hydrocarbons and signaling fiscal diversification. For businesses and investors, this creates both an opportunity to engage with a stabilized government budget and a risk of increased disposable income pressure among affluent consumers. Smart entrepreneurs should now consider tax-efficient investment and compensation strategies while leveraging the government’s commitment to fiscal prudence and economic resilience.
