For the first time in history, a personal income tax law is being introduced in Oman. Issued in June 2025, Royal Decree 56/2025 sets out the Personal Income Tax Law, a measure that will take effect as of 1 January 2028, giving individuals and employers multiple years to prepare. Before the executive regulation completes the practical details, it is important to comprehend the fundamental structure of the law, including who is subject to it, how the tax is calculated, and what it actually taxes.
Who is Taxed: Residents vs Non-Residents
Not everyone in Oman will be taxed the same way, the law draws a line between residents and non-residents.To begin with, under article 1, to be classified as a tax resident, an individual would have to have resided in the Sultanate of Oman for a period exceeding 183 days, continuous or intermittent, during a tax year. Anyone who does not meet this threshold is classified as a non-tax resident. This distinction matters because it determines the scope of income each person is taxed on. Article 6 imposes annual tax on net income of a tax resident in or out of the country. Meaning, tax residents get taxed on income made worldwide, while non-tax residents only get taxed on income made in Oman, a common approach that ties tax liability to where economic activity actually occurs, rather than to the individual.
How the Tax is Calculated
Not a single rial of income is taxed until it passes through three separate filters. First, gross income is simply defined as everything a person receives during a tax year, such as salaries, rent, interest, and so on. Second, every taxpayer starts with a 42,000 Rial Omani exemption on their gross income, since only earnings above this amount count as net income. For example, someone earning 60,000 Rial Omani a year would have a net income of 18,000 Rial Omani, which is the starting point for the next stage of calculations. Finally, the 18,000 Rial Omani is further reduced by any exemptions, allowable costs, and losses to arrive at the taxable income, to which Article 8’s 5% rate is then applied. Assuming no further deductions take place, the 18,000 Rial Omani would be taxed at 5%, resulting in a final tax bill of 900 Rial Omani.
What’s Taxed, and What’s Exempt
The law recognises eleven distinct sources of income, though it also exempts a handful of them entirely. Chapter Three of the Personal Income Tax Law outlines all the sources included in gross income, among them salaries, self-employment, rent, royalties, interest, and returns from stocks, real estate, and pensions. Article 25 carves out a number of exemptions, most notably for the sale of a primary residence, education and healthcare expenses for the taxpayer and their immediate family, and zakat and donations, capped at 5% of gross income. Taken together, these exemptions tend to target life’s essentials rather than income broadly, including housing, health, education, and charitable giving. Several are also limited in scope, the secondary residence exemption, for instance, can only be claimed once in a person’s lifetime, underscoring that these are targeted reliefs rather than a blanket reduction in tax.
Conclusion
The Personal Income Tax Law may not take effect until 2028, but its architecture is already clear. Royal Decree 56/2025 sets the structure, but the executive regulation will supply the details that determine how it actually works in practice, from allowable costs to compliance procedures. With more than a year still to go before the 1 January 2028 effective date, individuals and employers have time to get ahead of it, starting with the fundamentals laid out here.
To find out more on the upcoming personal income tax law, you can read the law on the link provided below:
