Oman Income Tax 2028 – Complete Guide to the New Personal Income Tax

Oman is entering a new fiscal era. For the first time in the Sultanate’s history and for the first time in the entire Gulf region, individuals will pay Oman income tax on their earnings. The change comes through Royal Decree No. 56/2025, and it takes effect on 1 January 2028. If you live, work, or run payroll in Oman, understanding this shift now will save you confusion later and give you more time to plan your finances effectively.

Although the new law will apply only to individuals whose annual taxable income exceeds the exemption threshold, it represents a significant development in the country’s tax framework. Whether you’re an employee, expatriate, self-employed professional, or employer, knowing how the rules apply to your situation is essential. At Al Mawaleh, we’ve put together this guide to explain every aspect of the new law and help you prepare with confidence before it comes into effect.

Understanding the New Oman Income Tax Law

The Oman income tax law was issued to diversify government revenue away from oil and gas, which currently accounts for the vast majority of state income. Rather than taxing everyone, the law is designed narrowly: it targets high earners while leaving the majority of residents untouched. Officials estimate that around 99% of the population will fall below the exemption threshold and pay nothing at all.

This single decision a high exemption combined with a low flat rate is what separates Oman’s approach from income tax systems elsewhere in the world. It’s meant to raise revenue without disrupting the everyday cost of living for most residents.

Who Is Affected: Residents vs Non-Residents

Not everyone in Oman will be treated the same way under the new personal income tax Oman framework. The law draws a clear line between two categories:

• Tax residents: anyone present in Oman for more than 183 days in a tax year (consecutively or on and off). Residents are taxed on their global income, not just what they earn inside Oman.
• Tax non-residents: anyone who doesn’t meet the residency threshold. Non-residents are taxed only on income sourced from within Oman.

This distinction matters enormously for expatriates who split time between Oman and other countries, as well as for Omani nationals who earn income abroad.

Income Tax Threshold and Tax Rate

This is the part everyone wants to know first. Under the new Oman income tax rules:

• The exemption threshold is OMR 42,000 per year (roughly USD 109,000).
• Any income earned above that threshold is taxed at a flat rate of 5%.
• Income below the threshold remains completely tax-free.

So if your annual gross income is OMR 50,000, you won’t be taxed on the full amount only on the OMR 8,000 that exceeds the threshold, after allowable deductions and exemptions are applied.

What Counts as Taxable Income

The Oman tax system defines gross income broadly to include both cash and non-cash benefits. Under current guidance, taxable income can include:

• Salaries and wages
• Income from immovable property (rental income)
• Income from industrial or intellectual property
• Other cash and in-kind benefits received during the tax year

Net income is calculated by subtracting the OMR 42,000 threshold from gross income, and taxable income is what remains after further deductions, exemptions, and losses are applied.

Exemptions Under the New Law

The law recognizes that not all income should be treated equally, and it builds in several exemptions to reflect Oman’s social and economic priorities. These include:

• Income earned outside Oman (a one-time exemption granted for two years)
• Capital gains from selling a primary residence
• Capital gains from selling a secondary residence (one-time exemption)
• Income from inheritance and gifts
• Income from industrial property rights (exempt for five years from registration)

These carve-outs are a core part of how the Oman tax system balances revenue generation with fairness for families and long-term residents.

Deductions You Can Claim

Beyond exemptions, taxpayers may also reduce their taxable income through specific deductions. The law currently allows deductions for:

• Education expenses
• Healthcare expenses
• Zakat, charitable donations, and endowments (waqf)
• Interest on loans used to finance the purchase or construction of a primary residence (one-time)

Because these deductions directly reduce the amount subject to personal income tax Oman rules, keeping accurate records of these expenses will matter a great deal once the law comes into force.

How This Fits Into Oman’s Broader Tax System

Personal income tax doesn’t exist in isolation it completes a picture that already includes VAT, excise tax, customs duties, and corporate taxation. Understanding the wider Oman tax system helps put the new personal tax into context.

This is also where corporate income tax in Oman comes in. Companies operating in the Sultanate have been subject to corporate tax for years, typically at a standard rate, with different treatment for sectors like oil and gas. The new personal tax now brings individuals into that same formal tax structure, closing a gap that made Oman unusual even among countries with corporate taxation. In short, corporate income tax in Oman and personal income tax will now operate side by side as twin pillars of the national revenue system.

Impact on Employers and Payroll

For businesses, the arrival of Oman income tax means payroll systems, compensation structures, and HR policies will need review well before 2028. Employers with high-earning expatriate staff should start thinking about:

• Updating payroll software to handle withholding calculations
• Reviewing compensation packages that may push employees over the OMR 42,000 threshold
• Communicating changes clearly to affected staff
• Planning ahead for reporting obligations once Executive Regulations are published

Executive Regulations detailing filing procedures, forms, and timelines are expected within a year of the law’s publication, giving both employers and employees a runway to prepare.

Filing, Compliance, and What Comes Next

The tax year under the new law follows the Gregorian calendar, running from 1 January to 31 December. While the core law is already published, many procedural details exact filing deadlines, return formats, and enforcement mechanisms will come through Executive Regulations issued by the Oman Tax Authority. Staying updated on these regulations will be essential for anyone close to or above the exemption threshold.

Why Professional Tax Services in Oman Matter Now

With a law this new, getting it right on your own can be difficult, especially if your income involves property, foreign earnings, or business ownership. This is exactly where working with experienced tax services in Oman makes a real difference. A good advisor can help you:

• Estimate your exposure under the new threshold and rate
• Identify which exemptions and deductions apply to your situation
• Prepare documentation in advance of Executive Regulations
• Avoid last-minute compliance issues once the law takes effect

Conclusion

The introduction of Oman income tax marks a historic turning point for the Sultanate and the wider Gulf region. With a high exemption threshold, a low flat rate, and a range of exemptions and deductions, the new law is designed to affect only a small share of high-income earners while leaving most residents untouched. However, if you’re an expatriate, business owner, or high-income professional, now is the time to understand how the Oman tax system may impact your financial situation before the 2028 implementation date.

At Al Mawaleh, we help individuals and businesses prepare for these changes with expert tax services in Oman. Whether you need support estimating your potential liability, understanding Oman income tax law, or learning how corporate income tax in Oman interacts with your personal earnings, our team is here to provide clear guidance and help you plan with confidence.

Let Al Mawaleh Guide You Through Oman’s New Income Tax

With Oman’s new income tax taking effect on 1 January 2028, it’s important to prepare early. Whether you’re an individual, expatriate, or business, Al Mawaleh can help you understand your tax obligations, maximize eligible exemptions and deductions, and stay compliant with the latest regulations.

Contact Al Mawaleh today for trusted tax guidance and expert support.

Location
Majan Building, Opposite CSK Cafe, Ghala, Muscat Governorate, Sultanate of Oman

Email
info@mawaleh.com

Phone
+968 7733 8545

Frequently Asked Questions

When does the Oman income tax officially take effect?

The law comes into force on 1 January 2028. Executive Regulations with further filing details are expected before then.

Who has to pay personal income tax in Oman?

Only individuals earning above OMR 42,000 annually are taxed, at a flat 5% rate on the excess amount.

Will expatriates be taxed the same as Omani citizens?

Yes, the law applies to both residents and non-residents, though residency status affects whether global or only Oman-sourced income is taxed.

How is this different from corporate income tax in Oman?

Corporate income tax applies to company profits, while this new law taxes individual earnings above the exemption threshold for the first time.

Can deductions lower how much tax I owe?

Yes, expenses like education, healthcare, zakat, donations, and primary home loan interest can reduce your taxable income.