Oman’s Personal Income Tax Begins in 2028, Signaling Major Fiscal Shift

Oman’s personal income tax, beginning in 2028, will make it the first GCC country to implement such a measure, with a 5 percent rate on high earners. The move aligns with Vision 2040 goals to diversify revenue, reduce oil dependence, and support social protection.

Oman has issued Royal Decree No. 56 of 2025, formally establishing a personal income tax (PIT) regime that will come into effect at the start of 2028.

The tax, which applies a flat rate of 5 percent on certain high-income individuals, makes Oman the first Gulf Cooperation Council (GCC) country to introduce such a measure.

Who will be taxed and what income qualifies

The tax applies to natural persons whose annual gross income exceeds OMR 42,000 (US$109,231.8). Income types subject to PIT are clearly defined under the law, although further granularity is expected in the executive regulations, which will be published within a year of the law’s appearance in the Official Gazette. It is pertinent to note that the PIT will be imposed on individuals, not corporate entities, so foreign investment will remain undisturbed.

According to the Tax Authority, the PIT will affect only about 1 percent of the population. The policy thus aims to protect middle- and low-income earners while targeting high-net-worth individuals with Oman-sourced income.

The law is part of Oman’s commitment to financial responsibility and macroeconomic stability. Minister of Economy Said bin Mohammed Al-Saqri said that the new tax measure will strengthen fiscal resilience and reduce exposure to oil price volatility, which currently influences up to 85 percent of Oman’s public revenue.

Read more: Oman’s New Foreign Investment Rules Explained 

Social protections and exemptions built into the law

To cushion the impact on residents, Oman’s PIT law includes a range of deductions and exemptions. These take into account the socio-economic fabric of the country and allow for write-offs related to education, healthcare, zakat contributions, charitable donations, inheritance, and primary housing expenses.

The design is meant to preserve purchasing power and maintain economic equilibrium, especially given that most Omani households fall well below the taxation threshold. The government emphasized that the income exemption level was calibrated through an in-depth socioeconomic study, using income data from multiple public agencies to ensure minimal disruption.

Alignment with Vision 2040 and revenue diversification goals

The PIT regime is a strategic pillar of Oman’s Vision 2040, a national roadmap aimed at building a knowledge-based, diversified economy. It also complements existing fiscal reforms rolled out under the Medium-Term Fiscal Plan (2020–2024), which include value-added tax (VAT), excise tax, and measures to reduce public debt.

The introduction of PIT is expected to improve revenue predictability and reduce Oman’s overreliance on oil. The Sultanate aims to increase non-oil revenue to 15 percent of GDP by 2030 and 18 percent by 2040. With corporate income tax already generating OMR 630 million (US$1.63 billion) and VAT plus excise tax contributing OMR 645 million (US$1.67 billion) annually, the new PIT is projected to further strengthen fiscal buffers and finance key elements of the social protection system.

Implementation roadmap and digital readiness

Karima Mubarak Al Saadi, Director of the Personal Income Tax Project, confirmed that Oman’s Tax Authority has completed all administrative and technological preparations for rollout. A centralized electronic platform has been developed to facilitate tax filings, income verification, and taxpayer communication. The system is integrated with relevant government departments to ensure accurate reporting and encourage voluntary compliance.

The Tax Authority has also invested in specialized workforce training to equip its staff with the skills needed to handle the new compliance landscape. Guidance materials and manuals for both individuals and legal entities will be published on a phased basis ahead of 2028, ensuring sufficient lead time for understanding obligations.

Legal framework and compliance expectations

The PIT law consists of 76 articles spread across 16 chapters and outlines in detail the definitions, scope, enforcement mechanisms, and appeal processes. Executive regulations in future are expected to clarify the specific types of income included, such as employment income, dividends, or capital gains, and the extent to which foreign nationals will be covered.

Employers will likely bear new responsibilities under the law. Finance and HR departments in Omani companies must prepare to handle payroll withholding, employee communication, and annual reporting once the tax becomes operational. As such, the business community is being encouraged to assess their readiness now.

Way ahead

Oman is transitioning toward a more globally familiar tax structure that mirrors what international professionals may already be used to. This could improve transparency and support long-term fiscal sustainability, even if it alters one of the region’s historical draws, that is tax-free income.

Read more: Oman’s Top-Up Tax for Multinational Enterprises: An Explainer 

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