Oman’s Tax-Free Paradise Ends: 5% Income Tax Coming in 2028

Oman, one of the tax-free nations, will be introducing a 5% personal income tax on individuals whose annual gross income is more than 42,000 Omani riyals. This new law is effective from the beginning of the year 2028 and is issued under Royal Decree No. 56/2025, having 76 articles distributed across 16 chapters. It also offers exemptions for several expenses such as education, housing, healthcare, zakat, and donations, which are part of basic necessities.

Oman is one of the Gulf Cooperation Council (GCC) countries, along with Qatar, Saudi Arabia, the United Arab Emirates, Bahrain, and Kuwait. All these countries do not impose personal income tax. Therefore, with the new personal tax law, Oman will be the first GCC country to introduce personal income tax.

Since the income tax will be applicable to high earners, the tax authority has analysed through a study that 99% of the population will remain unaffected. The limit of 42,000 Omani riyal shows that the income earned by lower and middle-class residents will be protected by this new rule.

This new law is part of the broader goals of Oman Vision 2040, which focuses on boosting the Sultanate’s public finances. Currently, the country does not levy a tax on its residents, as the country is known for its oil and gas industry. Therefore, the personal income, including income from capital gains, wealth, death, or property, is not subject to taxation in the Sultanate of Oman. However, the new taxation law will encourage the economy to earn revenue from non-oil revenue sources and to rely less on oil revenues. The government also aims to increase the share of non-oil revenue to 18 % of the country’s GDP by 2040.

Karima Mubarak Al Saadi, Director of the Personal Income Tax Project, has shared that the tax authority has set up a digital system that is linked with the department to verify the data given by the taxpayer. This will also promote tax compliance by the taxpayers. The authority has also trained its officials for tax implementation, and guidebooks for individuals and businesses will be released on schedule to explain the process clearly.