DUBAI, U.A.E: Oman is set to introduce a personal income tax as part of its strategy to reduce dependency on hydrocarbon revenues. From 2028, a five percent rate will apply to individuals earning over US$109,000 annually, representing the top one percent of earners in Oman.

This will mark the first such tax among the six Gulf Cooperation Council countries.

The announcement was made through a royal decree and reported by the official Oman News Agency over the weekend. It remains to be seen if this decision will influence other nations in the region. However, the International Monetary Fund has suggested that Gulf states may need to consider new taxes in the future to broaden government revenue streams.

So far, the absence of income tax has benefited development in the Gulf, attracting a workforce from abroad. However, Oman's decision to implement this tax aims to enhance financial stability by diversifying revenue sources, thereby protecting the economy from the "fluctuations" of the global energy market, according to Minister of Economy Said bin Mohammed Al-Saqri.

He noted that revenues from oil and gas can comprise up to 85 percent of the country's public income, depending on market conditions. "The tax will create an additional revenue stream to diversify public income sources and mitigate the risks tied to reliance on oil," Al-Saqri explained.

Oman has been considering a personal income tax for several years, and this move follows a series of other fiscal reforms. In 2020, Oman initiated a plan to reduce public debt and enhance economic growth.

This initiative aligns with Oman's broader Vision 2040 program, which seeks to transition the country towards a technology-driven economy.