Oman personal Income Tax Law​

In brief

As mentioned in our previous news alert of 22 June 2025, His Majesty Sultan Haitham bin Tariq issued Royal Decree No. 56/2025, officially promulgating the Personal Income Tax Law in the Sultanate of Oman.​

On 30 June 2025, the Personal Income Tax Law was published in the Official Gazette No.1602. This news alert includes a summary of the key provisions of the Law.​

In detail​

Key definitions​

• Person: A natural person subject to tax, including both residents and non-residents for tax purposes.​

• Tax Year: A full calendar year beginning on the first of January and ending on the thirty-first of December of the same year.​

• Gross Income: All amounts in cash and benefits in-kind that a person receives from the sources during the Tax Year.​

• Net Income: A fixed amount of OMR 42,000 is deducted from the annual Gross Income to arrive at Net Income.​

• Taxable Income: Net Income less exemptions, costs and losses.​

• Resident: A tax resident shall refer to every person whose period of presence in Oman exceeded 183 consecutive or intermittent days during a Tax Year.​

• Tax rate: 5%.​

• Employer: The party for which a person works. This includes individuals, public and private institutions, entities and companies, non-governmental organisations incorporated in Oman whether they are Omani or foreign, and regional and international organisations.​

Sources of income​

The following are the main sources of income, which shall be subject to tax:​

• Salaries, wages, allowances, bonuses, incentives, grants, shares and other benefit in cash or kind; ​

• Self-employment;​

• Leasing;​

• Royalties;​

• Interest;​

• Returns from stocks, shares and bonds;​

• Returns from the disposal of stocks, shares, bonds;​

• Returns from the disposal of real estate;​

• Retirement pensions and end of service benefits;​

• Prizes;​

• Grants and donations;​

• Director's and member's remuneration.

Implications for individuals​

Below is a summary of the implications for resident and non-resident individuals:

One-time special exemption: Income of the tax resident earned from outside Oman for a period of 18 months starting from the day following the end of his capacity as a non-tax resident.

Main exemptions and deductions (subject to certain conditions)​

• Education expenses for self and family;​

• Health care expenses for self and family;​

• Donations to certain entities, not exceeding 5% of the Gross Income;​

• Certain other types of compensation;​

• Salaries received by members of diplomatic missions and allowances paid to Omani residents working in diplomatic missions;​

• Salaries of an Omani tax resident earned outside Oman;​

• Contributions made by a person in post-employment pension and benefit schemes, whether obligatory or optional, with a maximum of two schemes;​

• Proceeds of disposal of the Primary Residence, provided the disposal takes place after at least 2 years from the date of notifying the Authority of the election;​

• Proceeds of disposal of the Secondary Residence, once in a lifetime​

• Income from shares listed on the Muscat Stock Exchange, and on investment bonds issued by the Government, and the proceeds from their disposal;​

• Income from interest on bills and bonds issued by the Government and proceeds of their disposal;​

• Inheritance, grants and donations between spouses and first-degree relatives;​

• Interest on bank loans obtained for the purpose of building or purchasing the primary residence, and the financing costs in Islamic transactions for the same purpose, provided once in a lifetime;​

• Income from intellectual property rights related to patents, designs, drawings, models, trademarks, methods, and secret formulations, for a period of 5 years from the date of registration.​

• For self-employment, either 15% of the Gross Income, or the actual expenses will be allowed as a deduction.​

Tax losses​

Tax losses may be carried forward and set off for a period of 5 years against income from the source. Losses shall only apply to the following sources:​

• Self-employment;​

• Leasing;​

• Disposal of real estate assets;​

• Disposal of shares, stocks and bonds.​

Compliance​

• Tax return filing: Electronically, within 6 months from the end of the Tax Year.​

• Tax payment: Due along with the tax return.​

• Statute of limitations: 3 years from submitting the tax return within which an audit can be conducted by the Oman tax authorities.​

The law allows for filing a revised return if any error or omission is identified. The law also provides for severe penalties for non-compliances and also for hiding or falsely providing the data/details. ​

Implications for companies​

Tax filing: If a person only earns salary, wages or pensions, they may request the employer to file a tax return on their behalf along with a declaration that they have no other income source.​

Tax payment: ​

Employer: An employer must withhold and pay any tax due on their employees’ salaries, wages, member's remuneration and pensions periodically.​

For certain other categories of income, companies may be requested to withhold and pay taxes on behalf of residents and non-residents at a specified rate subject to certain conditions.

Key takeaways​

The Tax Authority is required to publish the Executive Regulations within a period of 1 year. Further, they have indicated that they will be gradually publishing guidance manuals.​​

Given this landmark development, businesses and high-income earners should closely monitor personal income tax updates to ensure they are adequately prepared ahead of implementation.  ​​

We would be happy to connect with you for discussions on the impact on individuals and businesses.

How we can help you...​

Personal tax advisory​​

• Assessing the impact of the Law on your personal circumstances and advising on the practical implications for individuals and their families;​​

• Tailored advice on structuring your income and assets efficiently and making use of the exemptions and deductions available under the Law;​​

• Advising on the interaction between Oman personal income tax and other jurisdictions, including double tax relief and residency matters.​​

Personal tax compliance​​

• Helping you to understand and comply with the new tax filing obligations, including preparation and filing of tax returns;​​

• Support in the event of a tax enquiry by the Oman Tax Authority.​​

Employer payroll obligations​​

• Review your employees’ employment contracts and guide you on the salary structures;​​

• Propose a suggested calculation of personal income tax based on assumptions and include your net pay salaries;​​

• Support you with the periodic payroll compliance reporting related to PIT;​​

• Prepare salary payment files for your employees as per bank requirements.​​