Introduction
On June 22, 2025, the Sultanate of Oman made a groundbreaking announcement: it will implement a personal income tax (PIT) regime beginning in 2028, becoming the first member of the Gulf Cooperation Council (GCC) to do so. According to Royal Decree No. 56/2025, individuals earning more than 42,000 Omani riyals annually (approx. €105,000) will be subject to a 5% flat tax.
This historic reform is a key part of Oman’s long-term fiscal strategy to diversify government revenues and reduce dependence on oil—a central objective of its national development agenda, Oman Vision 2040. The introduction of personal income tax is not only a domestic milestone, but also a significant development for the broader Middle East region.
Turning Point for Fiscal Reform
Oman’s decision may well set a precedent for neighbouring GCC states. Although countries such as the UAE, Saudi Arabia, and Qatar have introduced VAT, excise duties, and corporate income taxes in recent years, none have implemented personal income taxes—until now.
The move reflects a growing trend across the GCC: the recognition that economic resilience and long-term sustainability require diversified income streams. Oil and gas revenues have long underpinned government budgets, but volatile prices, global energy transitions, and rising fiscal needs are prompting regional leaders to reimagine their economic models. Oman’s PIT initiative is a direct response to this new reality—and others in the region may soon follow suit.
Limited Scope, Broad Implications
The PIT will apply to all Omani residents—both nationals and expatriates—who earn above the specified threshold. However, government authorities have reassured the public that the tax will affect only a small segment of the population. Around 99% of Oman’s residents fall below the taxable income level and will not be impacted.
To ensure fairness and social responsibility, the legislation includes exemptions and deductions tailored to Oman’s social and cultural context. These cover essential areas such as education, healthcare, charitable contributions, inheritance, and housing costs—ensuring that the system remains progressive and equitable.
What This Means for the Middle East
Oman’s bold move could signal the beginning of a fiscal evolution across the Middle East. Tax-free personal income has long been a hallmark of the region’s economic model, attracting foreign talent and investment. However, as Gulf states pursue ambitious economic diversification goals—such as Saudi Arabia’s Vision 2030 and the UAE’s We the UAE 2031—the traditional reliance on hydrocarbons is giving way to broader, more sustainable revenue strategies.
Introducing a PIT regime is a complex and politically sensitive task. Yet, by starting with a low 5% rate and ensuring robust safeguards, Oman is showing how such a reform can be approached pragmatically and inclusively. If successful, its experience could serve as a template for other GCC nations.
With implementation set for 2028, businesses, financial institutions, and individuals in Oman still have time to adapt. Employers may need to reassess compensation packages, while financial advisors and tax professionals will play a key role in helping residents understand and navigate the new system.
Implications for International Tax Planning
For Belgian individuals and businesses with ties to Oman and the wider GCC region, the introduction of a PIT in Oman marks a significant shift with far-reaching implications for cross-border tax planning—particularly regarding the ‘subject to tax’ condition that features prominently in Belgium’s double tax treaties.
Belgium signed a tax treaty with Oman already in 2008, though it has not yet entered into force. A treaty with Qatar has also been signed but remains inactive for the time being. At present, Belgium has only two active double tax treaties in the GCC: one with the UAE and one with Kuwait. The treaty with Saudi Arabia was withdrawn in 2016 and is no longer being pursued.
In practice, the ‘subject to tax’ condition can limit access to treaty benefits if the individual is not considered to be (sufficiently) taxed in their country of residence. This has been a persistent challenge in the GCC, where most jurisdictions—including the UAE—do not levy personal income tax. The issue is particularly acute under the Belgium–UAE treaty, where UAE tax residency is recognized only if the individual is subject to income taxation. As the UAE currently has no personal income tax, the Belgian tax authorities generally do not recognize UAE tax residency for individuals—posing a barrier to treaty-based relief for Belgian expatriates or investors living in the UAE.
Oman’s introduction of a PIT regime in 2028 could therefore prompt a reconsideration of existing administrative positions by the Belgian tax authorities—not just in relation to Oman, but potentially across the region as fiscal frameworks evolve. Once the Belgium–Oman treaty enters into force, individuals residing in Oman and paying income tax may have a stronger claim to treaty benefits. In the meantime, Belgian residents earning income from Oman or the GCC should review their tax residency status, and adjust their structuring, compensation, or relocation strategies accordingly.