Purpose This paper examines the effect of specific macroeconomic variables on tax revenue policy in Oman, as an oil-dependent economy, using annual data from 1991 to 2020. Design/methodology/approach The autoregressive distributed lag model is used, and its outcomes were verified by numerous cointegration methodologies. Findings The findings showed that tax revenue change is positively influenced by the size of economic activity (SEA) and diversification support programme (DSP), while the foreign direct investment (FDI) inflows, shadow economy (SE) and inflation rate (INF) exhibited a negative relationship with tax revenue policy. Originality/value At the macroeconomic level, Oman’s tax revenues have been largely unexplored territory. To the best of the authors’ knowledge, this study is the first to be conducted on the economy of Oman in this matter. Specifically, it contributes to the literature by investigating the influence of certain macroeconomic variables on shaping the fiscal tax revenue policy in the economy of Oman. The outcomes recommend that the Sultanate of Oman should diversify its tax revenues by implementing centralised regulations, improving tax oversight, providing access to financial services and granting equal opportunities to beneficiaries and taxpayers in order to create a solid basis for the development and expansion of the formal economy. The Omani government should reform its taxation system effectively by cutting back on tax incentives and tax exemptions for foreign businesses to support the competition in the market and ultimately manage the stability of country’s tax revenues.
Maashani et al. (Sat,) studied this question.