On 22 June 2025, the Omani authorities announced the introduction of a Personal Income Tax Law (“PITL”) pursuant to Royal Decree No. 56/2025 (the “Royal Decree”).
Although the PITL is referenced in Article 1 of the Royal Decree, the text was not published alongside the decree itself.
The full text of the PITL is expected to be published in the Official Gazette on Sunday, 30 June 2025 and will come into force on 1 January 2028.
Based on a recent announcement made by the Omani Tax Authority, it is expected that the PITL will apply to the income of natural persons who are tax resident in Oman on the following basis:
- 0% on annual income up to OMR 42,000; and
- 5% on annual income which exceeds the threshold of OMR 42,000.
Details on precisely what sources of income would be considered as taxable for the purposes of the PITL as well as which deductions may be permitted will only become clear once the legislation is published. However, it is anticipated that deductions will be permitted for education and healthcare expenses, zakat contributions and charitable donations, among other items.
The Royal Decree effectively repeals Article 18bis (1) of the Omani Income Tax Law as well as any other legal provisions contrary to the PITL as of the date of the PITL’s entry into force. Article 18bis (1) provides that any natural person present residing in Oman for at least 183 continuous or interrupted days in a tax year shall be considered a tax resident.
The PITL aims to strengthen the public finances of Oman while aligning with the broader goals of Oman Vision 2040. Revenues generated from the tax will be used to fund Oman’s social protection system and diversify its economy.
As the first Gulf state to impose personal income tax, this marks a significant development in the region. It remains to be seen whether any of the other states will follow suit.
At present, no other Gulf state has signaled an intention to introduce personal income tax. However, tax policy in the region is clearly evolving and the impact of this new tax is likely to be watched carefully by other states.
We will provide a further update once the PITL and its implementing regulations have been issued. In the meantime, feel free to contact us to discuss how these changes may affect you.
Key Contacts
Shiraz Khan, Partner, Head of Taxation, s.khan@tamimi.com
Rachel Fox, Partner, Tax, r.fox@tamimi.com
Husain Dawani, Associate, h.dawani@tamimi.com