High Income Earners Evading Tax To Face Jail term, Hefty Fines: Oman

Gulf Insider

30-06-2025

Underreporting income, overreporting expenses through false deductions, and misrepresenting assets for high Omani earners can lead to jail term of up to three years and maximum fine of 20,000 riyals.
That came after Oman enacted its first Personal Income Tax Law, with implementation set for January 1, 2028, aimed at fiscal diversification and economic sustainability under Vision 2040.
The new law, issued by Royal Decree No. 56/2025 by Sultan Haitham bin Tarik, will apply a 5% tax rate on individuals earning over OMR 42,000 annually. This high exemption threshold means approximately 99% of Oman's population will not be affected, according to the Tax Authority.
According to the official Gazette, it's prohibited for a person to use fraudulent methods or engage in commercial or financial transactions during any tax year with the aim of achieving illegal tax gains in violation of the provisions of this law.
Such gains include avoiding, reducing, deferring the payment of tax due, avoiding or reducing potential tax due, shifting the tax burden to another person. avoiding the obligation to calculate, deduct, or withhold tax, and unlawfully recovering the tax due, or more than its value.
The regulations specify the administrative penalties that the President may impose on anyone who violates the provisions of this law and the regulations, provided that the fine does not exceed 5,000 riyals.
Additionally, anyone who commits any of the following acts in violation of the provisions of this law shall be punished by a fine of no less than 1,000 riyals and no more than 5,000 riyals: Intentionally refrains from submitting a tax return within the prescribed deadlines. Intentionally refrains from implementing the Authority's request to submit records, documents, data, information, invoices, or other tax-related matters. Intentionally refrains from deducting amounts required to be deducted for the tax account. Intentionally refrains from paying amounts deducted for the tax account.
Anyone who commits any of the following acts in violation of the provisions of this law shall be punished by imprisonment for a period of no less than one year and no more than three three years, and a fine of no less than 10,000 riyals and no more than 20,000 riyals, or by either of these two penalties: Knowingly submits false information in the tax return. Knowingly attaches false records, documents, information, data, invoices, or other information to the tax return. Intentionally destroys, conceals, or disposes of records, documents, information, data, invoices, or other information before the expiration of the specified period for their retention.
Without prejudice to the criminal liability of natural persons, a legal entity shall be punished by a fine equivalent to twice the maximum penalty prescribed for the crime if the crime was committed in its name or on its behalf by its chairman, a member of its board of directors, its manager, or any other official acting in that capacity, or with its consent, cover-up, or gross negligence. The same penalty shall apply to anyone who incites, assists, or agrees with another to commit any of the crimes stipulated in this law. The penalty prescribed for the crime shall be doubled, both its maximum and minimum, in the event of repeating.
No public action may be initiated, filed, or any action taken in connection with the crimes stipulated in this law, except upon the request of the President.
The President may reach a settlement in the crimes stipulated in this law, at any stage of the public action and before a final judgment is issued, provided that the accused pays the amounts due to the Authority, in addition to an amount equal to half the maximum penalty fine prescribed for the crime. In all cases, the settlement shall result in the dismissal of the public action arising from the aforementioned crimes.
The new individual income tax comprises 76 articles across 16 chapters, the law will target specific income sources while integrating social exemptions—such as education, housing, healthcare, zakat, and donations—to ensure fairness and social justice. The move complements Oman's long-term fiscal consolidation strategy and aims to increase non-oil revenues to 18% of GDP by 2040.
The law's executive regulations will be issued within a year of publication in the Official Gazette. The Tax Authority is also deploying an electronic tax compliance system, integrating government databases to ensure accuracy in declarations and promote voluntary compliance.
Last year, Oman collected OMR 1.4 billion from corporate, VAT, and selective taxes. The personal income tax is expected to complement these revenues and bolster fiscal credibility, enhancing Oman's appeal to global investors.
This landmark policy comes amid a regional trend of Gulf economies moving toward diversified revenue models as they reduce dependency on oil.