Oman Becomes the First GCC Country to Introduce Personal Income Tax

In a significant regional development, Oman has introduced Personal Income Tax in the Royal Decree No. 56/2025, published in the Official Gazette Issue No. 1601. Effective from 1 January 2028, the law introduces a personal income tax regime applicable to certain high-earning individuals.

Scope and Coverage

The new tax applies to:

• Natural persons deriving income from employment, business, professional services, property, or capital within Oman.
• Tax @ of 5% is imposed on the income exceeding the gross annual income of OMR 42,000 (approx. AED 400,000 or SAR 410,000).
• The taxable base and exclusions will be further defined through executive regulations expected within one year.

Key Exemptions

The law outlines several exemptions, including:

• Government and insurance fund pensions
• End-of-service gratuities
• Zakat contributions
• Inheritance and gifts (subject to conditions)
• Reimbursements related to healthcare and education
• Other types as specified in the executive regulations

What to look forward to

The Ministry of Finance is expected to issue Executive Regulations within the next 12 months to clarify:

• Scope of taxable income (especially for expatriates and offshore income)
• Residency and source rules
• Filing procedures and payment timelines
• Compliance obligations for employers and business owners

Andersen Takeway

This marks a historic move, making Oman the first GCC country to legislate a personal income tax. It needs to be seen whether other GCC countries follow suit. Taxpayers, employers and wealth advisors should begin assessing potential exposure, especially those with multiple income streams or business activities.