Oman: 16 Income Sources Exempted From New Individual Income Tax
The law introduced a 5% tax on individuals earning more than OMR 42,000 annually. However, with this relatively high threshold, the Tax Authority estimates that around 99% of the population will remain unaffected.
The issuance of Oman's first-ever Personal Income Tax Law, enacted under Royal Decree No. 56/2025, is part of the country's broader efforts to promote fiscal diversification and long-term economic sustainability under Oman Vision 2040.
The law outlines 16 types of income that are exempt from personal income tax under Article 25. These include:
1. Salaries received by members of diplomatic and consular missions and other diplomatic representatives from foreign countries or international organisations, within the scope of official duties—subject to reciprocity.
2. Living allowances paid to Omani residents working in diplomatic missions (excluding diplomats themselves).
3. Income earned abroad by a tax resident for 18 months following a change in residency status.
4. Salaries and wages earned abroad by Omani tax residents.
5. Contributions to pension and post-service benefit schemes, whether mandatory or optional, up to two schemes.
6. Educational expenses for the individual, spouse, first-degree relatives, and dependents—within limits set by regulation.
7. Healthcare expenses for the individual, spouse, first-degree relatives, and siblings under their care—as specified in the regulations.
8. Income from a primary residence, provided the residence has been declared to the Tax Authority for at least two years.
9. One-time lifetime exemption on income from the sale of a secondary residence.
10. Zakat and charitable donations (including endowments) to approved entities, up to 5% of gross income.
11. Returns on investment certificates issued by the Government of Oman, and income from their sale.
12. Interest earned from government bonds and notes, and proceeds from their sale.
13. Compensation payments received for any reason, excluding salary or wage compensation.
14. Income from inheritance, wills, grants, or gifts between spouses or first-degree relatives.
15. Interest on housing loans or Islamic financing for a primary residence—one-time, lifetime exemption under regulated conditions.
16. Income from industrial property rights (patents, trademarks, designs, etc.) for five years from the date of registration.
In 2024, Oman collected OMR 1.4 billion in revenue from corporate income tax, VAT, and selective taxes. The introduction of personal income tax is expected to complement these existing streams, strengthen fiscal credibility, and enhance Oman's attractiveness to international investors.
This landmark law positions Oman alongside other Gulf countries that are shifting toward diversified, non-oil revenue models, marking a significant evolution in the region's economic landscape.
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