Oman to Raise Billions by Taxing Just 1% of Its Population, Sees Major Gains from Trade with India

In a major shift from Gulf norms, Oman is set to introduce a personal income tax from January 1, 2028, targeting only the top 1% of earners. This bold fiscal move is part of its long-term development blueprint, ‘Oman Vision 2040’, aimed at reducing reliance on oil and boosting non-oil revenue. The new tax is expected to generate significant revenue without burdening the general population, while Oman continues to benefit heavily from trade and investment ties with India.

Key Points: 🏛️ What the New Tax Looks Like:

• 5% personal income tax on individuals earning more than 42,000 OMR/year (~Rs 94.5 lakh).

• Only 1% of Oman's population will fall under this taxable bracket.

• Legal framework includes 76 articles, with exemptions for education, healthcare, housing, charity, etc.

• The tax is expected to boost non-oil revenue to 18% of GDP by 2040.

🌍 Oman's Economic Diversification:

• The tax reform aligns with Oman Vision 2040, a strategic push to modernize the economy and attract foreign investment.

• Oman is building a digital tax infrastructure to link government databases for efficient compliance.

India: A Key Economic Partner 📊 Trade Snapshot:

• India is Oman's 3rd largest source of imports (after UAE and China).

• India's exports to Oman in 2024: US$3.96 billion.

• Bilateral trade in FY 2024–25: US$10.6 billion.

• Oman’s non-oil exports to India include:

  • Machinery

  • Plastics

  • Metals

  • Chemicals

👷♂️ Indian Diaspora in Oman:

• Over 6.2 lakh Indians live in Oman, of which 4.8 lakh are professionals and workers.

• Indian companies have invested in sectors like iron & steel, textiles, fertilizers, and cement.

Why This Move Matters:

• First-ever personal income tax in Oman's history, breaking from Gulf tradition of zero personal tax.

• Oman aims to reduce oil dependency, stabilize public finances, and create a more resilient economy.

• By taxing only the wealthy and protecting the poor through exemptions, the plan maintains social equity while securing long-term revenue.