Do you pay personal income tax in Oman? From 1 January 2028, Oman will become the first country in the Gulf to tax the income of individuals. The Personal Income Tax Law issued by Royal Decree 56/2025 was issued in June 2025, giving everyone two and a half years to prepare. The tax only applies to income above 42,000 Rial Omani a year, the rate is a flat 5%, and the list of exemptions is long, and the law is more detailed than you think. This post walks through who is taxed, on what, at what rate, what is exempt, and what you will actually have to do.
Who pays
The law works on where you live, not on your nationality, so Omanis and foreigners are treated in exactly the same way. Under article 1, anyone who spends more than 183 days in Oman during a calendar year, whether in one stretch or on and off, is a tax resident and is taxed on their income wherever in the world it is earned. Everyone else is a non-tax resident and is taxed only on income earned inside Oman.
What counts as income
Income has a broad definition. Rather than defining income in general terms, article 7 sets out eleven sources that make up a person’s gross income, and a separate chapter then spells out what each source includes. Income covers:
- salaries
- self-employment income
- rent
- royalties
- interest
- dividends and gains on selling shares and bonds
- gains on selling real estate
- pensions and end-of-service gratuities
- prizes and gifts
- bonuses paid to members of Majlis Al-Dawla, Majlis Al-Shura, municipal councils, and boards of directors
Salary itself is defined widely to include allowances, bonuses, incentives, profit shares, and benefits in-kind such as housing, so an employment package is taxed on its full value and not only on the basic pay.
The rate and threshold
The tax is 5% of taxable income, and the key figure is 42,000 Rial Omani. The law only taxes what exceeds 42,000 Rial Omani in a year, so that amount comes off the top for everyone. It is not a band you fall into once you cross it. Someone earning 50,000 Rial Omani a year is taxed on 8,000, not on the whole 50,000, and any exemptions and costs that apply to them are deducted from that 8,000 before the 5% is calculated.
What is exempt
Article 25 lists sixteen exemptions that are deducted before the 5% is worked out, and several of them will matter to ordinary households:
- Education and health care expenses, not only for the person but for their spouse, parents, children, siblings under their care, and foster children.
- Contributions to pension and post-employment benefit schemes.
- Zakat and donations, including waqf, up to 5% of gross income.
- The interest or Islamic financing cost on a loan to build or buy a primary residence, once in a lifetime.
- Anything received by inheritance, will, or as a gift between spouses or first-degree relatives.
- Compensation of any kind, other than compensation for lost salary.
To see how this adds up, take someone earning 60,000 Rial Omani a year. The first 42,000 is not taxed, leaving 18,000. If they paid 6,000 Rial Omani in school fees for their children and 2,000 Rial Omani in medical bills for a parent that year, these are deducted, leaving 10,000 Rial Omani of taxable income and a tax bill of 500 Rial Omani.
Property, foreign income, and other exemptions
Property is handled carefully in article 20. The gain on selling a primary residence is exempt provided the sale takes place at least two years after the person notifies the Tax Authority that it is their primary residence, and the gain on selling a secondary residence, such as a farm or beach house, is exempt once in a lifetime. Both residences must be owned by a tax resident and chosen in advance by notifying the authority, and the choice of a secondary residence can only be made once. The practical lesson is that anyone who owns their home should notify the authority early, because the two-year clock only starts from that notification. Inheriting property, or receiving it as a gift from a spouse or first-degree relative, is not treated as a sale, so no tax arises at that point.
There are exemptions aimed at people working across borders, too. On top of all this, any foreign tax already paid on the same income can be deducted from the Omani tax due, up to the amount of the Omani tax.
Losses
Losses are dealt with in articles 26 and 27, and while most employees will never encounter them, they matter to anyone with a side business, a rental property, or investments. If self-employment, leasing, the sale of real estate, or the sale of shares and bonds produces a loss in a year, that loss is deducted from income from the same source, and whatever cannot be used is carried forward for up to five years. A loss from one source can never be set against income from another.
Take a person who earns a salary and also owns a flat they rent out. If, after deducting the actual expenses of the flat, the rent falls 3,000 Rial Omani short in a bad year, that 3,000 does not reduce the tax on their salary. It is carried forward and deducted from the rental income of the following year, and if that is not enough, the year after, for up to five years under article 26. If the flat keeps losing money for longer than that, what is left of the loss is simply gone.
Filing and paying
Under article 33, only a person whose gross income exceeds 42,000 Rial Omani needs to file a return, and it is filed electronically within six months of the end of the year. Someone whose only income is a salary or pension from a single employer can ask the employer to file on their behalf. In practice, most of the tax will never pass through the person’s hands. Employers must withhold the tax on salaries, pensions, and gratuities and pay it to the Tax Authority directly. Companies and government entities paying rent, dividends, and other kinds of income above 20,000 Rial Omani must also withhold part of the tax at source.
In short
For anyone earning below 42,000 Rial Omani, the new law changes nothing except that their employer will need to keep a closer eye on payroll. For those above it, the rate is low, the exemptions are wide, and most of the tax will be collected before the money reaches their account. What remains to be seen is the executive regulation, which Royal Decree 56/2025 requires the Chairman of the Tax Authority to issue, and which will set the procedures, forms, and the controls on the education, health care, and housing loan exemptions. We highly recommend that anyone earning above the threshold, and every employer, becomes familiar with the law before it enters into force in January 2028. You can read it in full in English on the link below:
