Dubai, Jun 23 (AP) Oman has rolled out plans to levy personal income tax as part of a broader push to move the sultanate's economy away from reliance on hydrocarbons, the official Oman News Agency said Sunday.

The move, issued by royal decree, is a first among the six-member oil-rich Gulf Cooperation Council. However, the 5 per cent tax won't be imposed until 2028.

Only those who make upward of USD 109,000 annually — the top 1 per cent of earners in Oman — will be required to pay it, the Gulf state said.

It's unclear whether this will inspire other nations in the area to follow suit, though the International Monetary Fund has predicted that Gulf states may need to impose new taxes in the coming years to diversify government revenues.

The lack of income tax so far has been a boon for development in the Gulf, helping to attract migrant workers to the region.

But for Oman, the introduction of the income tax “will further prioritize financial stability by diversifying revenue sources” that will help shelter the country from “fluctuations” in the global energy market, Minister of Economy Said bin Mohammed Al-Saqri said He added that oil and gas revenues can account for up to 85 per cent of the nation's public income, depending on the market.

"The tax serves as a new revenue stream to diversify public income sources and mitigate risks associated with reliance on oil as the primary revenue source," Al-Saqri said.

Oman has been weighing the personal income tax for several years, and its introduction follows other fiscal reforms. In 2020, it rolled out a programme to cut down public debt and boost economic development.

The move, Al-Saqri said, is part of Oman's broader Vision 2040 project, which hopes to turn the country into a technology-based economy. (AP) GSP

Personal income tax introduced will apply to top earners from 2028 to diversify public revenue and reduce oil dependence. Oman will introduce a personal income tax by royal decree: a five percent levy effective in 2028, directed at the top one percent of earners who exceed the announced income threshold, as a targeted rather than broad-based measure to diversify revenue.