In Oman, high-income individuals avoiding tax payments may face imprisonment and heavy financial penalties.
In a significant move towards economic diversification, Oman has enacted its first Personal Income Tax (PIT) Law, making it the first Gulf Cooperation Council (GCC) country to impose personal income tax on individuals rather than corporate entities. The new law, issued by Royal Decree No. 56/2025 by Sultan Haitham bin Tarik, will take effect from January 1, 2028.
High earners with an annual gross income exceeding OMR 42,000 (approximately US$109,232) will be subject to a flat 5% tax rate. This policy is expected to enhance Oman's appeal to global investors and contribute to the country's long-term fiscal consolidation strategy, aiming to increase non-oil revenues to 18% of GDP by 2040.
While the new law targets compliance by high earners, it does not currently specify exact acts leading to fines or imprisonment. However, general tax noncompliance, such as late filing, non-payment, or providing false information, could potentially lead to penalties. In Oman's broader tax context, delays in income tax payments might lead to additional charges, and noncompliance can trigger further penalties or assessments.
Detailed penalties, including possible fines or imprisonment, will likely be specified in the forthcoming executive regulations, which are expected within a year of the law's issuance. Violation of the provisions of this law can result in a jail term of up to three years and a maximum fine of 20,000 riyals.
The new law prohibits the use of fraudulent methods or engaging in commercial or financial transactions during any tax year with the aim of achieving illegal tax gains. Such illegal tax gains include avoiding, reducing, deferring the payment of tax due, shifting the tax burden to another person, and unlawfully recovering the tax due.
To promote voluntary compliance, the Tax Authority is deploying an electronic tax compliance system, integrating government databases to ensure accuracy in declarations. The personal income tax is expected to complement the revenues from corporate, Value-Added Tax (VAT), and selective taxes, which last year amounted to OMR 1.4 billion.
Approximately 99% of Oman's population will not be affected by the new tax law, according to the Tax Authority. The law will target specific income sources while integrating social exemptions such as education, housing, healthcare, zakat, and donations. The new individual income tax law comprises 76 articles across 16 chapters.
It is essential to note that 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.
The move complements Oman's regional trend towards diversified revenue models as Gulf economies reduce their dependency on oil. The new PIT Law is a significant step towards fiscal credibility and economic stability for Oman, setting a precedent for other GCC countries to consider similar policies in the future.
- The new Personal Income Tax (PIT) Law in Oman, aimed at economic diversification, could boost the country's appeal to investors in the health, education, and business sectors, among others.
- Highlights of the forthcoming executive regulations may include exact acts leading to fines or imprisonment for tax noncompliance, which could extend to areas like late filing, non-payment, or providing false information.
- To encourage voluntary compliance, the Tax Authority is introducing an electronic tax compliance system, thoroughly integrating government databases to ensure accurate tax declarations in sectors like travel and general news.
- The new individual income tax law in Oman, affecting only a small percentage of the population, also includes provisions for social exemptions in areas such as education, housing, healthcare, zakat, and donations.
