Oman’s Personal Income Tax Law: Key Rules on Tax Liability

Oman’s Personal Income Tax Law was promulgated under Royal Decree 56/2025 and is set to take effect on 1st January 2028, establishing a legal framework defining who will be subject to personal income tax. 

In an exclusive interview with Times of Oman, Dr. Mohammed Ibrahim Al Zadjali, Chairman of Mohammed Ibrahim Law Firm, explained that “a tax resident is a person whose presence in Oman exceeds 183 days, whether continuously or intermittently, during a tax year. A non-tax resident is anyone who does not meet this condition. A tax resident pays tax on income realised both inside and outside Oman, while a non-tax resident pays tax only on income realised inside Oman. In both cases, tax is imposed at a rate of 5% of taxable income.”

“A person’s gross income includes sources such as salaries and wages, self-employment, leasing, royalties, interest, and returns from and disposal gains on stocks, shares and bonds, pensions and end-of-service gratuities, among others. The first OMR 42,000 of gross income is excluded in determining net income, while applicable exemptions, costs and losses are then deducted to determine taxable income, which is taxed at 5%. A person whose gross income exceeds OMR 42,000 must file an electronic tax return within six months from the end of the tax year, subject to certain exceptions under the Law,” he said.

He stated that “employers shall pay amounts required to be withheld for tax on salaries and wages, pensions, end-of-service gratuities and membership bonuses which they are required to pay, and shall transfer them to the Authority periodically under the regulation. Other entities, such as government bodies, companies and establishments, must also withhold tax on payments from other income sources. Where the recipient is a tax resident and income from such source exceeds OMR 20,000, 20% of the tax due must be withheld. Where the recipient is a non-tax resident, an amount equivalent to the full value of the tax due shall be withheld in accordance with the controls specified by the regulation.”

“Deliberately failing to file, withhold, or pay withheld tax can result in fines. Serious offences such as knowingly providing false data, or deliberately destroying, concealing, or disposing of records before the retention period ends, may carry fines or imprisonment. Understanding who must pay, and when, is essential for both individuals and businesses well ahead of the law coming into effect,” he concluded.

(Mohammed Ibrahim Law Firm ([email protected]), (+968 244 87 600) was established on 14th December 2006 and is serving clients through its offices in Muscat and Sohar, as well as operating on a request basis in other areas. It offers legal representation across a wide range of practice areas that include Labour Law, Corporate, Commercial, Contracts, Banking and Finance, International Trade, Foreign Investment, Insurance, Maritime Law, Construction and Engineering Contracts, International Arbitration, Intellectual Property and more).