Oman announced exemptions under its Personal Income Tax Law, effective January 1, 2028, as published in the official Gazette. With a 5% tax on incomes above OMR 42,000, the law aims to diversify revenue while sparing 99% of residents.
Issued under Royal Decree No. 56/2025, the law outlines 16 tax-exempt income categories, including the salaries of diplomats, foreign-earned income for Omani residents, pension contributions, educational and healthcare expenses, rental income from primary residences, and intellectual property earnings for five years. Other exemptions include zakat, charitable donations (up to 5% of income), interest on government bonds, and inheritance between close relatives. The high OMR 42,000 threshold ensures 99% of Omanis are unaffected.
The Personal Income Tax Law, Oman’s first, aligns with Oman Vision 2040 to reduce oil dependency and boost economic resilience. The exemptions reflect a commitment to protect lower-income households, encourage innovation, and support family systems, per Oman Observer. With non-oil revenue rising 8.2% in 2024, the law strikes a balance between global tax standards and local priorities, ensuring equitable implementation.
Economists Dr. Said Al-Saadi note that the law’s progressive design supports Oman’s $104 billion economy while fostering investment. However, some businesses are concerned about the costs of compliance. The Tax Authority plans to launch awareness campaigns to clarify the benefits of the law before 2028, targeting approximately 200,000 taxpayers.
Oman’s 2028 tax law, with its extensive exemptions, marks a pivotal fiscal reform that balances revenue diversification with social equity. Affecting only high earners, it enhances Oman’s global economic standing while preserving its cultural values. As part of Oman Vision 2040, the policy sparks discussions on sustainable growth, resonating with citizens and investors across the Gulf.
