Oman’s Non-Oil Revenue Surpasses Budget Expectations: What This Means for Investors and Business Growth
MUSCAT: A critical figure dominates discussions on Oman’s public finances, and in 2025, this figure remained steadfast at ۷۰ درصد. This represents the proportion of total state revenue derived from oil and gas last year.
Hydrocarbon revenues reached RO 8.481 billion, while non-hydrocarbon sources — including taxes, fees, investment returns, and other revenues — accounted for the remaining 30 percent, or RO 3.641 billion. These figures were disclosed in the State’s Final Account for Fiscal Year 2025, published earlier this week by the Ministry of Finance.
The non-oil revenue exceeded its budget projection of RO 3.573 billion by 2 percent, a positive indicator though not yet reflective of a structural transformation. Rather, it serves as one data point within a broader ongoing trend.
Breaking down the RO 3.641 billion non-oil revenue reveals noteworthy details. Tax and fee income totaled RO 2.107 billion, surpassing budget expectations by 4 percent. Value Added Tax (VAT) contributed RO 631 million, outperforming the target of RO 580 million, while customs duties reached RO 261 million against a budgeted RO 232 million. Corporate income tax maintained its position as the largest non-oil revenue source, generating RO 656 million.
Non-tax revenue added RO 1.495 billion, with investment income leading at RO 805 million. Returns from Oman’s state-owned assets—sovereign funds, public companies, and real estate—are now a significant element of the fiscal landscape.
The 2025 budget was based on an oil price assumption of $60 per barrel, whereas the actual average price was $72. This $12 difference largely underpinned the robustness of Oman’s fiscal performance last year. However, it also highlights fiscal vulnerability; a $12 drop would have resulted in a markedly different outcome.
Oman Vision 2040 emphasizes that fiscal diversification extends beyond expanding non-oil GDP to increasing non-oil government revenue. While interrelated, these goals are distinct. An economy may diversify its activities without reducing government reliance on hydrocarbons if tax structures, investment returns, and fee revenues fail to adapt accordingly.
Bridging the 70-to-30 revenue dependence gap will necessitate sustained private sector expansion, enhanced compliance, broader investment income, and strategic reconsiderations of tax rates and frameworks aligned with a more diversified economy.
The 2025 final accounts indicate that Oman is progressing in the right direction, yet they also underscore the considerable journey still ahead.
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Oman’s continued heavy fiscal reliance on oil and gas, which accounted for 70% of state revenue in 2025, highlights a critical vulnerability to global oil price fluctuations. For businesses and investors, this underscores the urgent need to capitalize on non-oil sectors and diversify revenue streams, especially through expanding private sector activities and optimizing tax and investment frameworks. Smart investors should closely monitor policy changes around tax structures and non-oil investment opportunities to align with Oman Vision 2040’s drive toward sustainable fiscal diversification.
