MUSCAT: Personal Income Tax is expected to generate approximately RO 80 million (around $208 million) when it debuts in the Sultanate of Oman in 2028, according to projections by international ratings agency S&P Global Ratings.

Per Royal Decree 56/2025 promulgating the Personal Income Tax Law (PTIL), Oman is set to become the first GCC member state to introduce this new levy in a bid to bolster non-hydrocarbon revenues. Applicable primarily to high-earning individuals, the new tax will be levied at a flat rate of 5 per cent on annual incomes exceeding the threshold of RO 42,000 (approximately $109,000). However, deductions will be permitted for education and healthcare expenses, zakat contributions, charitable donations and other eligible items.

According to S&P Global Ratings, the anticipated revenue of RO 80 million upon the launch of Personal Income Tax in 2028 will represent around 0.1 per cent of GDP in the first year. It will supplement existing tax revenues, including corporate income tax and value-added tax, which currently account for about 14 per cent of total government revenue.

At the same time, the Omani government has been adopting measures to improve the management of public finances, the New York-headquartered ratings agency noted. As a result of these measures, capital and current spending have been reduced by about 10 per cent over the past five years, while VAT was introduced for the first time in 2021. Likewise, progress has been made in implementing a treasury single account system to enable further efficiencies.

Commenting on the fiscal outlook over the next three years, S&P Global Ratings stated: “We forecast Oman will remain in a net general government asset position over 2025–2028, as the government remains committed to deleveraging the balance sheet and liquid assets are expected to remain near 43%–45% of GDP. With plans to continue partially paying down debt, gross government debt is expected to reach 33% of GDP by 2028, from 36% of GDP in 2024 and the post-pandemic level of 68%”.

Additionally, liquid assets have been accumulating via government deposits in domestic institutions and the central bank, as well as those managed by the sovereign wealth fund — the Oman Investment Authority (OIA) — in addition to assets held by public pension funds (SPF) and the Petroleum Reserve Fund, the agency said.

“As a result, we expect the government will retain gains in its net asset position, which we forecast to average about 8% of GDP over 2025–2028”, it stated.

For Fiscal 2025, a modest deficit of 0.5% of GDP is forecast, compared with a 1.5% surplus in 2024. “This largely reflects our prevailing Brent oil price assumption of $60/bbl for the second half of 2025 and $65/bbl over 2026–2028, relative to $81/bbl in 2024. We anticipate the government will balance its fiscal position over 2026–2028, given an expected moderate increase in oil and gas production and our expectation that the government will continue its expenditure efficiency drive,”, S&P added in conclusion.

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