Oman – Taxation

How does the tax system in Oman work?

Oman administers its tax system through a single national body. The Tax Authority became an independent administrative and financial institution with its own legal identity in 2019, established under Royal Decree No. 66/2019 of 14 October 2019, and answers to the Minister of Finance. No regional or local income taxes exist in Oman, which makes the structure considerably more straightforward than in federal systems such as those of the United States, Germany, or Switzerland, where residents face obligations at both national and sub-national levels.

The current tax framework centres on corporate income tax, value-added tax (VAT), withholding tax, and excise duty — all of which relate to businesses and specific commercial activities. Crucially, personal income tax does not exist today (as of 2025), though that will soon change. Unlike the UK’s Pay As You Earn arrangement, where income tax is deducted directly from wages before they reach employees, no comparable mechanism operates for individuals in Oman — salaries are received in full.

On 22 June 2025, Oman promulgated Royal Decree No. 56/2025 (the Personal Income Tax Law), which introduces a 5% levy on individuals whose annual income surpasses OMR 42,000 (roughly US$109,000), with effect from 1 January 2028. This represents a landmark fiscal development — the first personal income tax of its kind among Gulf Cooperation Council (GCC) member states.

Tax residency is already codified in existing regulations, even ahead of the PIT law’s activation. Under the amendments to the Executive Regulations of the Income Tax Law (Article 18 bis of RD 118/2020), an individual is considered a tax resident if they are physically present in Oman for at least 183 consecutive or non-consecutive days within a given tax year. This mirrors the residency criteria used in France, the Netherlands, and numerous other countries. When the PIT comes into force, tax residents — whether Omani nationals or expatriates — will be liable on their worldwide taxable income.

Because the regulatory landscape is evolving rapidly ahead of the 2028 implementation, always consult the Oman Tax Authority portal directly for the most current rules and guidance.

Does Oman have double taxation agreements, and how do they affect expats?

By 2025, Oman had signed more than 35 double taxation avoidance (DTA) treaties with nations spanning Asia, Europe, and Africa. These include Algeria, Belarus, Brunei, Canada, China, Croatia, France, Hungary, India, Iran, Italy, Japan, South Korea, Lebanon, Mauritius, Moldova, Morocco, Netherlands, Pakistan, Portugal, Russia, Seychelles, Singapore, South Africa, Sudan, Switzerland, Syria, Spain, Thailand, Tunisia, Turkey, United Kingdom, Uzbekistan, Vietnam, and Yemen. Oman continues to build this network: on 8 December 2024 it concluded a DTAA with Cyprus, followed just a week later on 15 December 2024 by a DTAA with Tanzania.

The core purpose of these treaties is to ensure that the same income stream is not taxed in two different countries — once in Oman and again in the jurisdiction where the recipient is based. In doing so, DTAs provide greater certainty for investors, reduce the risk of an excessive combined tax burden, and facilitate the cross-border movement of capital, goods, and services.

Even though Oman currently imposes no personal income tax, DTAs still carry practical relevance for expatriates. They provide clarity regarding the treatment of pensions, director’s fees, and income originating abroad; they enable individuals to claim tax credits in their home country on income taxed elsewhere; and they help limit tax exposure for remote workers and digital nomads. Once the PIT enters into force in 2028, the importance of these treaties for expats managing income across multiple countries will increase substantially.

DTAs resolve potential double taxation either by cutting the applicable withholding tax rate or removing it entirely. For example, treaties with the United Kingdom and France provide for zero withholding tax on certain income categories, including dividends and interest, subject to the relevant treaty conditions being met. Oman’s agreement with China similarly offers reduced rates on dividends and royalties.

Treaty benefits are not applied automatically. To access reduced rates or exemptions, non-resident companies and individuals must demonstrate their eligibility by providing documentation — most notably a valid tax residency certificate issued by their home country’s authorities. The Oman Tax Authority requires these certificates as proof of entitlement. Where a DTAA has been ratified by an Omani Sultan Decree, its provisions take precedence over the domestic Income Tax Law.

The full and current list of Oman’s active DTAs, together with their effective dates, is available on the Oman Tax Authority’s DTA portal page. Always confirm which treaties are in force before taking financial decisions that depend on treaty relief.

What taxes do expats need to pay in Oman?

The table below provides an overview of the principal taxes that expatriates are likely to encounter in Oman as of 2025. The environment is changing, so always verify current rates and rules with the Oman Tax Authority.

Personal Income Tax

At present, Oman levies no personal income tax on individuals — a position that benefits both Omani nationals and foreign workers, who receive their full salaries without any income tax deduction. From 1 January 2028, however, a 5% tax will be applied to the annual income of individuals earning more than OMR 42,000 (approximately US$109,000). The PIT Law explicitly states that it shall not undermine any international agreements or treaties to which Oman is a party, meaning that DTA relief will continue to be available where applicable.

VAT

VAT has been charged at 5% on the majority of goods and services since its introduction in 2021. The following categories are exempt from VAT: financial services, healthcare services and related goods, educational services and related goods, undeveloped (bare) land, the resale of residential properties, local passenger transport, and the rental of residential accommodation. The exemption covering residential rental is particularly worth noting for expatriates leasing property in Oman.

Property and Stamp Duty

There is no recurring annual tax on property ownership in Oman. However, whenever land or property changes hands and is registered, a transfer fee of 3% of the sale value becomes payable to the Ministry of Housing. This is broadly analogous to stamp duty or property transfer taxes in other jurisdictions, although it arises solely at the point of the transaction rather than on an ongoing basis.

Social Insurance

Employers are required to contribute 9.5% of monthly salaries for their Omani employees towards social security (covering old age, disability, and death), along with a further 1% for industrial illness and injury cover. These requirements apply to Omani workers aged between 15 and 59 who are permanently employed in the private sector. Expatriate employees are generally excluded from this mandatory social insurance scheme. However, since July 2024, all employers — regardless of whether their staff are Omani or expatriate — must pay 1% per month of monthly gross salary (subject to a cap of OMR 3,000) as insurance for maternity and paternity leave.

Withholding Tax

Non-residents who do not have a permanent establishment in Oman but receive Omani-sourced income in the form of management fees, software usage fees or rights, or research and development fees are subject to a 10% withholding tax calculated on the gross amount. The definition of royalties encompasses equipment rental and payments for the use of software, intellectual property rights, patents, trademarks, and designs. This provision is most pertinent to expatriates who own or operate foreign businesses providing services to clients based in Oman. The standard WHT rate of 10% may be reduced or eliminated under a relevant double taxation agreement between Oman and the recipient’s country of residence.

Are there any tax breaks or special regimes for expats in Oman?

Oman does not offer a dedicated expatriate tax incentive scheme comparable to Portugal’s Non-Habitual Residency (NHR) programme or Italy’s flat-tax arrangement for new arrivals — both of which grant time-limited preferential rates designed to attract foreign talent. The incentive in Oman has historically been the general tax environment itself: the complete absence of personal income tax has applied uniformly to all residents, irrespective of their nationality.

The PIT Law is designed to increase government revenues without placing a burden on the majority of the population. It is also intended to help finance social protection initiatives. The OMR 42,000 income threshold has been set at a level that will leave most expatriates working in Oman unaffected when the tax becomes operational in 2028.

For those establishing businesses or making investments, Oman does maintain structured incentive frameworks. These include a five-year exemption from all taxes and a full or partial exemption from customs duties on manufacturing equipment imported by domestic industries. Further tax holiday arrangements provide a five-year income tax exemption — potentially renewable for a second term — from the date of incorporation for companies engaged in mining, tourism, certain dairy, livestock, and agricultural activities, fishing and fish processing, and public utility projects.

Oman also hosts several free zones that extend tax and operational benefits to businesses operating within their boundaries, among them duty exemptions, no minimum capital requirements, and reduced Omanisation quotas. Companies located within certain Omani free zones can benefit from corporate tax holidays of up to 30 years. If your relocation to Oman involves a business enterprise, structuring your activities through a free zone entity could yield considerable tax advantages — professional advice is strongly recommended in such cases.

Certain strategic sectors including manufacturing, tourism, logistics, and fishing may also qualify for temporary tax exemptions. Consult the Oman Tax Authority portal and engage a local tax adviser to confirm current eligibility requirements for any available exemption or incentive.

How and when do expats file a tax return in Oman?

Because personal income tax does not yet exist in Oman, individual expatriates currently have no obligation to file a personal tax return. The filing obligations described below apply primarily to businesses, companies, and self-employed individuals conducting commercial activities. From 2028, the new PIT law will introduce individual filing requirements — the Executive Regulations specifying the precise procedures are expected to be published by June 2026.

These Executive Regulations will set out the procedures, timelines, tax return forms, and other operational details required for PIT Law implementation, and are due to be issued within one year of the PIT Law’s publication in the Official Gazette (by 30 June 2026). Expatriates who intend to be resident in Oman when the PIT comes into force should monitor the Tax Authority’s portal closely for these regulations.

For businesses and entities currently liable for corporate income tax, the process involves the following steps:

1. Register with the Tax Authority: Registration with the Tax Authority is carried out by submitting business data on the prescribed form within 60 days from the commencement of the enterprise or the start of trading activity, whichever comes first.
2. Maintain proper accounts: The law requires accounts to be prepared in accordance with IFRS or comparable standards approved by the Oman Tax Authority (OTA), applied on a consistent basis. It specifically mandates accrual accounting unless the OTA has granted prior permission to use an alternative method.
3. Prepare and file the return electronically: The taxpayer must submit the income return for any given tax year through electronic means, no later than four months after the end of that tax year. For businesses operating on a calendar-year basis, this means a filing deadline of 30 April. The OTA’s e-services portal provides the tools for digital submission.
4. Attach audited accounts: The annual income return must be accompanied by audited financial statements signed by an auditor duly registered in Oman.
5. Pay tax due: Tax owed must be paid together with the final income return, within four months of the year-end.
6. Apply for extensions if needed: Reasonable extensions of time for submitting annual income returns may be granted at the OTA’s discretion, but such extensions do not postpone the payment of tax — late payment attracts an additional charge of 1% per month running from the due date until the actual date of payment.

If a taxpayer declares incorrect income in the tax return for any year, the OTA may impose a penalty ranging from 1% to 25% of the difference between the tax correctly due on the actual taxable income and the tax declared in the original submission. Given the pace at which the PIT framework is developing, it is highly advisable to engage a tax professional registered in Oman to ensure full compliance.

What are the tax implications of leaving Oman?

Under the current pre-2028 regime, the tax consequences of departing Oman are minimal for most individual expatriates, given the absence of personal income tax. No exit tax applies to individuals under the existing system. Once the PIT law takes effect, this picture may change, and those who have been subject to PIT obligations will need to understand how their final-year liabilities are handled — the Executive Regulations anticipated by June 2026 should address this point.

Exit taxes presently apply only at the corporate level, at the same rates as ordinary income taxes. Where companies are being wound up, all outstanding tax liabilities and assessments must be resolved in order to obtain a tax clearance certificate. If you operate a business in Oman and intend to dissolve it or relocate, securing a tax clearance certificate is a prerequisite for the dissolution process — failure to do so can leave you exposed to ongoing legal and financial consequences.

Expatriates who own property in Oman and sell it before or upon departure should bear in mind that a 3% property transfer fee is payable to the Ministry of Housing on the sale and registration of land or property. No personal capital gains tax currently applies to property disposals, but you should verify the position in your country of residence at the time of the sale, as that jurisdiction’s rules may differ.

Tax residency in Oman ceases once you have been physically present for fewer than 183 days in the country during the calendar year. There is currently no formal deregistration requirement for individual expatriates, but those who have been running businesses should ensure all outstanding returns have been filed, all tax clearances obtained, and any VAT registration properly cancelled. Retain clear records of your date of departure and entry and exit stamps from your passport, as these constitute the primary evidence of your tax residency status.

If you are relocating to a country that taxes its residents on worldwide income — such as France, Germany, or Australia — it is important to understand precisely when you will become tax resident there, since transitional periods between jurisdictions can give rise to overlapping obligations. A cross-border tax specialist can help you navigate this carefully, particularly once Oman’s PIT regime is operational.

Practical tips for managing taxes as an expat in Oman

• Keep a careful record of your days in Oman. The tax year runs from 1 January to 31 December, and tax residency is determined by presence in Oman for more than 183 days — whether consecutive or spread across the year. Maintain a log of all arrival and departure dates, and keep copies of the relevant stamps in your passport.
• Start planning for the 2028 PIT now. If your annual earnings exceed OMR 42,000 (approximately US$109,000), it is worth reviewing your financial arrangements well before 1 January 2028. Engaging a tax adviser at an early stage to assess the impact on your net income and explore lawful planning options is a sensible precaution.
• Make active use of your DTA entitlements. Double taxation treaties offer expatriates valuable certainty regarding the treatment of pensions, director’s fees, and foreign-sourced income, and can facilitate the claiming of tax credits abroad on income taxed in another jurisdiction. Even before the PIT comes into force, investigate whether your home country has a treaty with Oman and what protections it provides.
• Be alert to withholding tax on cross-border transactions. If you operate a business or freelance arrangement receiving payments from Oman-based entities, or if your company pays fees to foreign service providers, the 10% WHT may apply. This rate can be reduced under an applicable DTA, but you must establish your eligibility by providing documentation such as a valid tax residency certificate from your home country — the Oman Tax Authority requires such certificates as evidence of treaty entitlement.
• Keep on top of your home-country tax obligations. A number of countries tax their citizens or residents on worldwide income regardless of where they are based. Even in a low-tax environment such as Oman, you may still have filing obligations in your country of origin — seek qualified advice from an adviser familiar with your home jurisdiction.
• Take local advice before any property transaction. The 3% transfer fee applies to every property sale, and the rules governing who may purchase property in Oman as a foreign national are subject to specific legal requirements. Consult a locally registered legal and tax professional before proceeding with any purchase or sale.
• Watch for the PIT Executive Regulations. The Chairman of the Oman Tax Authority is required to issue the Executive Regulations for the PIT Law within one year of the Law’s publication in the Official Gazette. These regulations will set out the detailed filing procedures, deadlines, and forms. Add the official Tax Authority portal to your bookmarks and check it regularly for updates.
• Engage a specialist expat tax adviser. Given how rapidly Oman’s tax landscape is shifting, working with a tax professional who has direct, hands-on experience of both cross-border taxation and Oman-specific rules is strongly advisable. Ideally, choose someone who is familiar with both Omani tax law and the tax requirements of your home jurisdiction.

Frequently asked questions

Is there personal income tax in Oman right now?

As of 2025, no personal income tax is in force in Oman, but this is about to change. A Royal Decree introducing personal income tax was issued in June 2025, with the new regime taking effect on 1 January 2028. Until that date arrives, both residents and expatriates pay no income tax on wages or personal investment returns.

Who will be subject to the new personal income tax in Oman?

An individual qualifies as a tax resident if they are present in Oman for more than 183 days — consecutively or in aggregate — during a tax year. Once the PIT law is in force, all tax residents, whether Omani nationals or expatriates, will be liable on their worldwide taxable income. The rate is 5% on annual income exceeding OMR 42,000 (approximately US$109,000), effective from 1 January 2028.

Are capital gains taxed in Oman for individuals?

As of 2025, there is no personal capital gains tax in Oman. Individuals may dispose of property, investments, or other assets without triggering a CGT charge in Oman. The only cost associated with a property transaction is the 3% transfer fee due to the Ministry of Housing at the point of sale and registration. Once the PIT law comes into effect, capital gains may be treated as part of gross income — refer to the Executive Regulations when they are published for confirmation.

Is foreign income taxable in Oman?

Under the forthcoming PIT law, tax residents — both Omani nationals and expatriates — will be subject to tax on their worldwide taxable income, which means foreign-sourced earnings will in principle fall within scope above the OMR 42,000 threshold. Prior to 2028, the absence of personal income tax means that foreign income is not currently taxed in Oman at the individual level.

Do expats pay social security contributions in Oman?

The main social security scheme — requiring employer contributions of 9.5% plus 1% for industrial injury cover — applies to Omani employees aged 15 to 59 in the private sector and does not extend to expatriate staff. However, since July 2024, all employers, regardless of whether their employees are Omani or foreign nationals, must contribute 1% per month of monthly gross salary (capped at OMR 3,000) as insurance for maternity and paternity leave.

How do I find out if my country has a double taxation agreement with Oman?

The Oman Tax Authority publishes a comprehensive list of all double taxation avoidance agreements, including their effective dates and scope, on its official portal. The full list can be found at tms.taxoman.gov.om/portal/double-tax-agreements. If a treaty is in force, you will typically need to obtain a tax residency certificate from your home country’s tax authority in order to claim any available relief.

Is there inheritance or gift tax in Oman?

Oman does not impose any inheritance tax, estate tax, or gift tax. Assets transferred between family members on death or given as gifts are not subject to any specific charge in Oman. This stands in marked contrast to countries such as France, Spain, or the United Kingdom, where such taxes can be substantial. It is worth noting, however, that your home country may retain the right to tax inherited or gifted assets depending on where you are considered to be domiciled.

Do I need to file a tax return in Oman as an expat employee?

Under the current system, salaried expatriate employees in Oman have no requirement to submit a personal tax return, as no personal income tax exists. Filing obligations currently rest with businesses, companies, and commercial entities. When the PIT takes effect in 2028, individual filing requirements will apply to those whose income exceeds the OMR 42,000 threshold — the precise procedures will be defined in the Executive Regulations expected by mid-2026. Stay up to date via the Oman Tax Authority portal.

What happens to my tax position if I leave Oman?

Under the current regime, individual expatriates face no exit tax and no formal deregistration process upon leaving Oman. Your tax residency lapses once your physical presence in Oman falls below 183 days in the calendar year. If you have been running a business, you will need to obtain a tax clearance certificate and settle all outstanding obligations before any dissolution can take place. Keep thorough records of your departure date. Once the PIT enters into force in 2028, the rules governing final-year returns and departure procedures will be set out in the forthcoming Executive Regulations.