In a move that marks a new chapter in Oman’s economic journey, His Majesty Sultan Haitham bin Tarik has issued Royal Decree No. 56/2025, introducing the Personal Income Tax (PIT) Law, which will officially come into effect on January 1, 2028.

Why is Oman introducing personal income tax now?

This new law is part of Oman’s broader efforts to strengthen its financial system and reduce reliance on oil revenues, in line with the country’s long-term development plan, Oman Vision 2040.

What is the tax rate under the new PIT law?

It sets a 5% tax rate on individuals earning more than OMR 42,000 annually, which is approximately AED 400,000.

Who will be required to pay the new tax, and how many will it impact?

The PIT applies only to individual natural persons and will affect a small percentage of the population. In fact, studies show that 99% of Omani residents won’t be subject to this tax.

Will this tax affect lower and middle-income individuals?

No, the tax is designed with fairness in mind, ensuring that only higher-income individuals contribute, while everyday citizens remain unaffected.

How will the PIT revenue be used, and is Oman prepared to implement& support compliance with the new law?

The revenues from PIT will help support public services, fund parts of the social protection system, and contribute to a more stable national economy.Oman’s Tax Authority has already put in place the necessary systems and digital infrastructure to ensure smooth implementation. Guidance manuals, training programs, and coordination with other institutions are all part of the rollout plan, ensuring transparency and ease of compliance.

What’s Not Taxed? (16 PIT-Exempt Income Sources):

• Salaries of foreign diplomats and representatives are exempt, subject to reciprocity.
• Living allowances for Omani residents working in diplomatic missions (non-diplomats) are exempt.
• Income earned abroad is exempt for 18 months after a change in residency status.
• Foreign salaries and wages earned by Omani tax residents are tax-exempt.
• Contributions to up to two pension or post-service benefit schemes are exempt.
• Educational expenses for self, spouse, dependents, and first-degree relatives are exempt within regulatory limits.
• Healthcare expenses for self, spouse, first-degree relatives, and dependent siblings are exempt as per regulations.
• Income from a declared primary residence (held for at least two years) is exempt.
• One-time exemption on income from selling a secondary residence is allowed.
• Zakat and approved charitable donations are exempt up to 5% of gross income.
• Income and returns from government-issued investment certificates are tax-free.
• Interest and gains from government bonds and notes are exempt.
• Non-salary compensation payments are not subject to tax.
• Gifts, inheritance, and grants between spouses or first-degree relatives are exempt.
• One-time lifetime exemption on interest from primary housing loans under set conditions.
• Income from industrial property rights is exempt for five years from registration.

Conclusion

With the introduction of the Personal Income TaxLaw, Oman takes a significant step toward establishing a more diversified and sustainable economic framework, while upholding its commitment to safeguarding citizens’ welfare and promoting social equity.