On 22 June 2025, Oman issued Royal Decree No. 56/2025 promulgating Oman’s Personal Income Tax Law. The law will be published on 29 June 2025 and come into effect on 1 January 2028. While the official text of the law is awaited, some details on its coverage have been published by the Oman Tax Authority and media outlets.
The law introduces a 5% income tax on natural persons whose annual gross income exceeds OMR 42,000 (approximately USD 109,200). Gross income would include receipts in cash and kind.
The taxable income, calculated after reducing exemptions, deductions and losses from gross income, may include:
1. salary
2. income from immovable property
3. income from industrial / intellectual property
Exemptions may include:
4. income earned outside Oman (one-time granted for two years)
5. capital gains on sale of primary residence
6. capital gains on sale of secondary residence (one-time )
7. income from inheritance and gifts
8. income from industrial property rights (granted for 5 years from date of registration)
Deductions from taxable income may include:
1. education expenses
2. healthcare expenses
3. zakat, charitable donations and endowments (waqf)
4. interest on loans financing the acquisition or construction of the main residence (one-time)
Executive regulations are expected within one year of the date of publishing the law in the Official Gazette.
KPMG insights
This marks a historic fiscal milestone for Oman and the wider Gulf Cooperation Council (GCC) region, with Oman becoming the first GCC country to announce a personal income tax regime.
The introduction of person income tax aims to complete Oman’s tax system (that already comprises of corporate income tax, value added tax, excise tax and customs) and help fund the social protection system. It also aligns with the Oman Vision 2040 and supports long-term economic diversification by targeting non-oil GDP contribution, reducing hydrocarbon reliance, and reinforcing social protection programs.
With one of the highest exemption thresholds and lowest rates globally, it is expected that 99% of the population will be unaffected, demonstrating a socially considerate approach that promotes equity and supports public welfare without burdening lower income groups.
Why this matters
Businesses and individuals in Oman should be mindful of the possible implications the introduction of personal income tax will have. Employers (payroll/finance/tax) should examine their current capabilities to operate payroll withholdings for employees and facilitate payroll reporting obligations once the tax comes into effect. Employers should start looking at their existing and future employment contracts, salary and benefits structure, and their talent attraction and retention strategies, in light of the changing landscape.
Individuals in Oman should consider the impact personal income tax would have on their income source(s) and compliance obligations.
Early announcement of the introduction of personal income tax allows businesses and individuals a limited window of opportunity to prepare for compliance and optimization.
KPMG has a dedicated team of experienced personal income tax specialists. If you need assistance with personal income tax or other tax related matters in Oman, please reach out to your advisors at KPMG or the contacts mentioned below.
