Oman’s 2028 Income-Tax Shake-up: What Expats and High Earners Should Know

Disclaimer: This article is intended for general information only and does not constitute personal financial advice under UAE regulations governing financial blogs and advertisements.

A New Era: Personal Income Tax in Oman

On 22 June 2025, Sultanate of Oman issued Personal Income Tax Law under Royal Decree No. 56/2025. The law introduces a 5% tax on personal income for individuals earning over OMR 42,000 per year (gross income). The tax becomes effective on 1 January 2028, making Oman the first Gulf-region country to impose a personal income tax.

Who Is Affected — And Who Is Not

• The tax applies to all natural persons (citizens and residents, including expatriates), provided they meet the residency test — generally spending at least 183 days in Oman per year.

• Only those whose gross income exceeds OMR 42,000 annually will be subject to the 5% levy.

• According to official estimates, this threshold means roughly 99% of the population will not be taxed under the new law.

Deductions and Exemptions — a Socially Sensitive Approach

The law includes a number of deductions and exemptions aimed at preserving social fairness. Among qualifying reductions are: housing-loan interest, education and health-insurance costs, charitable donations and zakat, and costs related to rental income or freelance work.

Official summaries already confirm that pensions, inheritances, gifts, proceeds from sale of primary/secondary residences, and some foreign income (for a limited period) are among the income types exempted.

This design suggests that the system is intended to focus tax collection on higher earners, while safeguarding low- and middle-income individuals and retirees — reflecting a socially conscious tax regime.

Why Oman Is Doing This

The tax reform is part of the broader Oman Vision 2040 strategy, under which the Sultanate aims to reduce reliance on oil-revenues and broaden non-oil income sources.

By targeting high incomes and offering broad exemptions, authorities aim to strike a balance between generating stable revenue and maintaining social justice. The revenue collected is expected to support social protection programmes, public services, and long-term fiscal sustainability.

What This Means for Expats and High Earners

• If your gross annual income exceeds OMR 42,000 and you meet the residency requirement, you should plan for the 5% tax on taxable income from 1 January 2028.

• Expect to benefit from deductions (housing loan interest, health/education expenses, charitable contributions, etc.), which may significantly lower your taxable base.

• If your income is primarily from pensions, social benefits, housing rent, or falls under exempt categories, you likely will not be affected — especially given the broad exemptions envisaged by the law.

• Employers and employees should monitor forthcoming executive regulations, which are expected to define precise rules on income sources, residency tests, and reporting procedures.

Final Thoughts

Oman’s income-tax reform is a landmark in Gulf fiscal history. By combining a relatively high exemption threshold, modest tax rate and broad social exemptions, the law aims to introduce personal income tax without burdening the majority of residents.

For expatriates and high-income earners, the introduction of a 5% tax from 1 January 2028 represents a change to factor into financial planning and employment decisions. For lower-income earners or retirees, the impact may be minimal or nil — depending on their income sources.

In the evolving economic landscape of the Gulf, this reform reiterates that stable, diversified revenues — rather than reliance on hydrocarbons — are likely the future.

Photo by Katerina Kerdi