Tax in Oman is governed by a handful of separate laws, each covering a different kind of tax and each administered by the Tax Authority. Businesses pay tax on their profits under the Income Tax Law, spending is taxed through value-added tax and excise tax, payments abroad are subject to withholding tax, and from 2028 individuals will pay tax on their income under the new Personal Income Tax Law. This post walks through the five main taxes that apply in Oman, the law behind each of them, and what each one means for you.
Corporate income tax
Under article 112 of the Income Tax Law, every establishment, Omani company, and permanent establishment pays tax at 15% of its taxable income for each tax year. This is the tax most people mean when they say corporate tax, and it applies whatever the legal form of the company and whatever the nationality of its partners. However, there is an exception for small enterprises. An enterprise whose registered capital does not exceed 50,000 Rial Omani, whose gross income does not exceed 100,000 Rial Omani, and whose average number of employees does not exceed 15 pays a reduced rate of 3% under article 159bis 15, provided it does not carry on an excluded activity such as banking, insurance, or the extraction of natural resources.
As for deadlines, article 140 requires a company to file its income return within four months from the end of the tax year, while an enterprise on the 3% rate files within three months under article 159bis 18. Tax that is paid late attracts an additional tax of 1% for every month it remains unpaid under article 156, and under article 157 the government can pursue unpaid tax for seven years from the date it became due.
Value added tax
Where corporate income tax is charged on profits, value added tax is charged on spending. It has applied in Oman since April 2021 under the Value Added Tax Law, together with its executive regulation. The rate is 5%, and it is the tax you see added at the bottom of most bills. A business must register for VAT once the value of its supplies passes the mandatory threshold, which Tax Authority Decision 1/2021 sets at 38,500 Rial Omani, and it may register voluntarily once it passes 19,250 Rial Omani. However, not everything carries the 5%, as article 47 of the law, financial services, healthcare, education, and residential rent are exempt, and under article 51 exports, medicines, and basic food items are zero-rated.
Under Tax Authority Decision 189/2026, which amends the executive regulation, VAT invoices will have to be issued in an approved electronic format, starting on 1 April 2027 for taxpayers whose annual supplies exceed 5,000,000 Rial Omani and on 1 October 2027 for everyone else.
Withholding tax
Withholding tax is not a separate law but a part of the same Income Tax Law that governs corporate tax. Under article 52, tax is charged on certain payments made from Oman to a non-resident with no permanent establishment here, mainly royalties, fees for services and management, payments for software and research, and dividends and interest. Article 113 sets the rate at 10% of the gross amount. The duty falls on the Omani payer rather than the foreign recipient, under article 53, whoever makes the payment must deduct the tax and remit it to the Tax Authority within 14 days from the end of the month of payment.
Not every payment abroad is caught. Article 4bis 1 of the Executive Regulation of the Income Tax Law carves out a number of payments that do not count as fees for services, such as training, transporting and insuring goods, flight tickets and hotels abroad, reinsurance, and services connected with an activity or property outside Oman. It is also worth noting that the tax on dividends and interest has been suspended since January 2023 by a royal order announced by the Oman News Agency, and that a double taxation agreement with the recipient’s country may reduce or remove the 10%, so it is worth checking whether one exists before deducting.
Excise tax
Excise tax is the most targeted of the five. The Excise Tax Law taxes goods that the law describes as harmful to human health or the environment, or as luxury goods. The goods and their rates are set by Ministry of Finance Decision 112/2019. There is 100% tax on tobacco and its products, pork, alcoholic drinks, and energy drinks, and 50% tax on carbonated drinks. The tax is calculated on the retail price or the standard price published by the Tax Authority, whichever is higher, so it is built into the shelf price and most people pay it without noticing.
Two recent decisions show how the tax is being used. Under Tax Authority Decision 206/2026, from 1 October 2026 the standard price of tobacco cannot be less than 1 Rial Omani for every 20 cigarettes, which puts a floor under the tax on cheap brands. In the other direction, Tax Authority Decision 192/2026 removed products that help people quit smoking, such as nicotine gum, patches, and sprays, from the list of excise goods altogether.
Personal income tax
The Personal Income Tax Law comes into force on 1 January 2028, making Oman the first country in the Gulf to tax the income of individuals. Under article 6, a tax resident, meaning anyone who spends more than 183 days in Oman during the year, is taxed on income earned anywhere in the world, while a non-resident is taxed only on income earned in Oman. Nationality makes no difference.
The rate under article 8 is 5%, and it applies only to income above 42,000 Rial Omani a year, since the law defines net income as the amount in excess of that figure. Article 25 then lists a long set of exemptions and deductions that come off before the 5% is worked out, covering things like education, healthcare, pension contributions, and inheritance. Under article 33, only a person whose gross income exceeds 42,000 Rial Omani has to file a return, and an employee can ask their employer to file it on their behalf in certain circumstances.
Other charges
There are other charges that work like taxes even if they are not always called that. Very large multinational groups pay a top-up tax under the Law of the Top-Up Tax on Constituent Entities of Multinational Groups, which makes sure they pay at least 15% on their Omani profits. Imported goods carry customs duty under the Unified Customs Law of the GCC. Furthermore, at the local level, municipalities and governorates collect their own fees, such as the municipality fee on hotel and restaurant bills, the fee on entertainment tickets, and the fee for registering a tenancy contract.
Conclusion
In conclusion, the tax system in Oman is simpler than the number of laws suggests. A business pays 15% on its profits, or 3% if it is a small enterprise, collects 5% VAT on what it sells, deducts 10% from certain payments it makes abroad, and pays excise tax if it deals in tobacco, alcohol, or sugary drinks. From 2028, an individual earning more than 42,000 Rial Omani a year will pay 5% on the excess. Each of these taxes has its own law, its own registration and filing rules, and its own deadlines, and all of them are administered by the Tax Authority.
