2 July 2025 • 2 minute read
Oman announces Personal Income Tax starting 2028
Background
The Omani authorities have issued a Royal Decree No. 56/2025 on Personal Income Tax Law (PIT Law) which will enter into force at the beginning of 2028. With this development, Oman has become the first Gulf country to formally implement personal income tax for high-income earners, marking a historical shift in the region’s tax systems.
The PIT Law completes Oman’s comprehensive tax framework in line with the economic and social situation in the country. It aims at achieving the objectives of Oman Vision 2040 by promoting income diversification and reducing dependence on oil. In addition to its fiscal objective, the personal income tax is expected to play a significant role in advancing social justice through wealth redistribution, strengthen the country’s budget and partially finance the social protection system.
Key features of Oman’s personal income tax regime
Personal income tax will be levied on any natural person residing in Oman, whose total annual income exceeds OMR42 thousand (approximately USD109 thousand), derived from specific income sources as outlined in the PIT Law. The applicable tax rate is 5% of the taxable income.
According to a statement issued by the Omani Tax Authority, the PIT Law will also provide for a range of deductions and exemptions that take into account the social situation in Oman. These include allowances related to education, healthcare, inheritance, zakat, donations, primary housing.
The PIT law was introduced after a comprehensive study of its economic and social effects. It is noteworthy that the exemption threshold is considered high (OMR42 thousand), while the applicable tax rate is comparatively low (5%). The outcome of the study shows that only around 1% of the population in Oman will be subject to the personal income tax.
The PIT Law is expected to be published shortly in Arabic and English, and will reportedly enter into effect on 1 January 2028.
Key takeaway
The Personal Income Tax in Oman will become effective in 2028. With a relatively high exemption threshold, low tax rate and multiple allowances, Oman’s Personal Income Tax appears favourable compared to more mature tax jurisdictions.
However, it remains essential to understand its potential impact on individuals and monitor how this development may influence tax landscape across the Gulf region.