Oman Personal Income Tax: Key FAQs, Exemptions, Calculations Explained
The Personal Income Tax Law will be implemented on January 1, 2028.
The tax rate has been set at 5 percent.
No, the tax will only apply to individuals earning over OMR 42,000 annually. This implies that approximately 99 percent of Oman's population will not be affected, according to the country's tax authority.
Several exemptions have been listed. These include: Exemption for income earned outside Oman for a period of two years one time.
Exemption for income from the sale of a primary residence.
One-time exemption for income from the sale of a secondary residence.
Exemption for inherited income and gifts.
Exemption for income from industrial property right for five years from the date of registration.
Deduction for interest on financing the construction or purchase of a primary residence (one time only).
Deduction of zakat, charitable donations and endowments (waqf).
Deduction for education and healthcare expenses. Gross income: This includes all cash amounts and in-kind benefits received by the individual.
Net income: A fixed amount of OMR 42,000 is deducted from the annual gross income.
Taxable income: Exemptions, deductible expenses, and losses are subtracted from the gross income.
Tax due: Taxable income multiplied by tax rate (5 percent).
The personal income tax is a crucial step towards enhancing financial stability and completing the sultanate's fiscal sustainability framework.
Dr. Said Mohammed Al Saqri, Oman's minister of economy, said: 'The tax serves as a new revenue stream to diversify public income sources and mitigate risks associated with reliance on oil as the primary revenue source. It will help maintain current levels of social and service spending while preserving Oman's achievements in financial and economic stability under 'Oman Vision 2040' and its first executive phase, the Tenth Five-Year Plan (2021-2025).'
The latest move complements Oman's long-term fiscal consolidation strategy and aims to increase non-oil revenues to 15 percent of GDP by 2030 and 18 percent by 2040.
Oil and gas revenues account for 68 percent to 85 percent of Oman's total public income, depending on global energy prices. While oil prices have stabilized at favorable levels in recent years, they remain volatile, the minister said. Oman has managed additional oil revenues by reducing public debt to safe GDP ratios, increasing investment and social spending, and subsidizing essential goods and services, he added.
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