Oman: Announcement of Personal Income Tax in Oman from 1 January 2028

26 June 2025 – On 22 June 2025, the Tax Authority of Oman announced the introduction of the first Personal Income Tax (PIT) law, under Royal Decree No. 56/2025 issued by His Majesty Sultan Haitham bin Tarik. The law consists of 76 articles across 16 chapters and marks the Sultanate of Oman as the first Gulf Corporation Council (GCC) country to introduce PIT. 

While full details on the PIT law are expected to be issued later this month, the Tax Authority of Oman has confirmed that from 1 January 2028, natural persons who are resident in Oman will be subject to a 5% tax rate on net annual income exceeding OMR 42,000 (circa USD 109,000). The Tax Authority of Oman anticipates that 99% of Oman’s population will not be subject to PIT.

Calculation of Taxable Income

For the purposes of PIT, the Royal Decree defines gross income subject as ‘all cash amounts and in-kind benefits received by the individual’. Deductions are then available for items such as education and healthcare expenses, Zakat, charitable donations, and endowments (waqf), to give the resultant net taxable income. Net taxable income in excess of OMR 42,000 would be subject to the 5% rate of income tax.

The Tax Authority of Oman has also confirmed that there will be various exemptions available for items such as:

• Income earned outside Oman for a period of two years (one time only).
• Income from the sale of a primary residence.
• Income received from the sale of a secondary residence (one time only).
• Inherited income and gifts.
• Income from industrial property right for five years from the date of registration.

Impact of Announcement

The introduction of PIT in Oman is a significant development within the GCC context and aligns with Oman’s Vision 2040. The policies aim to:

• Redistribute wealth among various segments of society.
• Build a more diversified economy.
• Enhance financial stability.

Additional guidance regarding the implementation of PIT and associated executive regulations are expected within the next twelve months, ahead of the 1 January 2028 implementation date. Furthermore, it is estimated that the Tax Authority of Oman will introduce an electronic tax compliance system to support the implementation of PIT. This system will leverage current infrastructure and connect with government databases to ensure accurate tax reporting and foster voluntary compliance from taxpayers.

Deloitte’s view

While full details on the proposed tax regime are awaited, the implementation of income tax in Oman represents a pivotal shift within the GCC, as Oman becomes the first nation in the region to incorporate such measures to reduce its reliance on oil revenues and foster economic diversification. This strategic initiative is designed to create a more interdependent society, and sustainable national economy, which is less vulnerable to global market fluctuations.

With a proposed income tax rate of 5%, the tax rate in Oman is positioned significantly below the global average in addition to the substantial deductions and exemptions available. This positioning enhances Oman's attractiveness as a destination for investors and businesses, whilst complimenting the fiscal revenues from other tax sources (including VAT and Corporate Tax) as the country looks to reduce its dependance on oil revenues. 

In anticipation of the full details regarding the proposed tax regime, it is advisable for businesses to begin their preparatory measures promptly. Early preparation will ensure they are well-positioned to adapt to the new taxation environment. 

Notice

This alert has been written in general terms and does not constitute any form of advice or recommendation by Deloitte and, therefore, cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we highly recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action due to any material in this publication.

Deloitte Middle East would be happy to help readers understand how to apply the principles set out in this publication to their specific circumstances.

Contacts

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