Oman Personal Income Tax (2028 Implications) What You Need to Know

Overview

In June 2025, Oman made history by becoming the first GCC country to introduce a Personal Income Tax (PIT) under Royal Decree 56/2025, effective January 1, 2028. Aimed at high-income earners, this fiscal shift marks a major step in diversifying government revenue and reducing reliance on oil, aligning with Vision 2040 goals.

Who Will Be Affected?

• All natural persons (Omani citizens and expatriates) whose annual gross income exceeds OMR 42,000 (~USD 109,200) are subject to a 5% tax on net income. Gross income includes both cash and in-kind remuneration.

• Authorities estimate only 1% of the population will be impacted.

Taxable Income & Exemptions

Gross Income Scope

Includes:

• Salaries, allowances, bonuses

• Self-employment or professional fees

• Rental income, royalties, interest, dividends

• Capital gains and pensions.

Exemptions & Deductions

• Exemptions:

  • First OMR 42,000 earned

  • Foreign income (one-time two-year exemption)

  • Capital gains from primary and secondary residences

  • Inheritance, gifts, industrial property income KPMG+15KPMG+15DLA Piper+15Deloitte+1Gulf News+1.

Deductible expenses:

• • Education and healthcare

  • Zakat, donations, waqf

  • Interest on Islamic housing loan

  • Specific business-related expenses.

Residency & Worldwide Income

• Tax residency is defined as residing ≥183 days in a tax year.

• Residents are taxed on worldwide income, though foreign-sourced income is exempt for two years in total.

Employer Obligations

• Employers must withhold 5% tax at source for eligible employees.

• They must update payroll systems, adjust employment contracts, and issue annual tax statements.

Filing & Compliance Deadlines

• Annual Return Deadline: Within 6 months of tax year end (e.g., by June 30 for the 2028 year) .

• Non-residents leaving Oman: Return due at least 60 days before departure.

Penalties for Non‑Compliance

Details on penalties and interest are forthcoming in executive regulations, mandated before June 2026.

Why Oman Is Introducing PIT

• Diversify public revenues beyond oil & gas, which contribute 68–85% of income.

• Support social protection systems and reduce public debt.

• Align with Vision 2040 economic goals.

Impact on Individuals & Businesses

• Ordinary earners (< OMR 42,000) are unaffected (~99%).

• High-income expatriates may reconsider residency in light of new tax.

• Companies must adjust HR, payroll & compliance systems for taxation, reporting, and withholding obligations.

Preparing for 2028