This comprehensive tax guide has been developed with a focus on technical accuracy and practical relevance, specifically tailored for investors, expatriates, and business owners operating in Oman. It is based on the official tax laws enacted in 2025, directives from the Omani Tax Authority, and international financial transparency standards, providing essential insights for financial and strategic decision-making.
Whether you’re planning to invest in Oman, launch a business, or relocate for work, understanding the country’s tax system is a critical first step. This article offers a complete and up-to-date overview designed to help you navigate Oman’s tax regulations with clarity and confidence. All content is based on enforceable regulations and is structured for real-world application in financial, legal, and commercial contexts.
Overview of Oman’s Tax System
Oman’s tax framework is built on principles of transparency, simplicity, and global competitiveness—making it one of the most attractive jurisdictions for foreign investors and skilled migrants in the region.
Key Features:
- No personal income tax until 2028: Under Royal Decree No. 56/2025, only individuals earning more than OMR 42,000 per year (approximately USD 109,000) will be subject to a fixed 5% income tax starting January 2028. Over 99% of the population will remain exempt.
- Clear and low corporate tax rates: A standard rate of 15% applies to companies registered in mainland Oman, with a preferential 3% rate for eligible SMEs.
- Straightforward VAT structure: A unified 5% value-added tax (VAT) applies, with exemptions for healthcare, education, pharmaceuticals, exports, and certain real estate transactions.
- Extensive tax exemptions in free zones: Businesses operating in Oman’s free zones benefit from 100% corporate tax exemptions, full VAT exemptions, and duty-free imports of raw materials and machinery.
- Aligned with international financial standards: Oman complies with key global frameworks such as OECD, CRS, and FATCA, ensuring high levels of transparency and regulatory credibility.
These features collectively position Oman as one of the most tax-efficient countries in the region. All tax regulations are administered by the Tax Authority of the Sultanate of Oman.
Personal Income Tax – Official Implementation in 2028
Until 2025, Oman did not levy any form of personal income tax. However, with the issuance of Royal Decree No. 56/2025 by His Majesty Sultan Haitham bin Tarik, a significant shift in the national tax framework was introduced. According to this law—consisting of 76 articles across 16 chapters—a 5% personal income tax will come into effect starting January 1, 2028.
Who Will Be Subject to This Tax?
Only individuals earning more than OMR 42,000 per year (approximately USD 109,000) will be subject to this flat 5% tax. Government projections estimate that over 99% of the population will remain exempt from paying any personal income tax.
In addition to the standard exemption threshold, the law provides for a wide range of social and family deductions, such as health insurance expenses, school tuition fees, religious donations (Zakat), and other social welfare contributions. As a result, the actual taxable income is effectively limited to high-net-worth individuals.
Practical Examples
Example 1: Engineer earning OMR 4,000/month
- Annual income: OMR 48,000
- Standard exemption: OMR 42,000
- Deductions (health + education): OMR 6,000
- Taxable income: OMR 0 → No tax due
Example 2: Business owner earning OMR 100,000/year
- Standard exemption: OMR 42,000
- Additional deductions (Zakat and donations): OMR 5,000
- Taxable income: OMR 53,000 → Final tax due (5%): OMR 2,650
Goals and Impacts of the New Law
- Diversify government revenue sources and reduce dependence on oil
- Promote social equity and redistribution of wealth through progressive participation
- Support public services such as education, healthcare, housing, and digital transformation
A Key Consideration for Investors and Expats
Although the law takes effect in 2028, understanding its potential impact is crucial for foreign professionals, business owners, and residency applicants. Foreign nationals with high incomes—especially those operating under formal business structures in Oman—may fall within the scope of the new law.
Strategic financial planning and proper entity structuring are essential well in advance of implementation.
Connsect—as a trusted advisory partner for business and economic migration in Oman—is ready to help you assess the implications of this tax reform and design practical, customized strategies to remain fully compliant and optimized.
Corporate Income Tax in Oman
The general corporate income tax rate in Oman is 15%. Small companies may qualify for a preferential 3% rate if their annual gross income is below OMR 100,000 and they employ no more than three Omani nationals. Meanwhile, oil and gas companies operating under government contracts are taxed at a significantly higher rate of 55%.
| Topic | Details |
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| Tax Rates |
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| Taxable Scope |
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| Key Notes |
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| Reporting Requirements |
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Taxable income includes net profit, income from services or product sales, rental income, and other business-related earnings within Oman. All companies are required to submit an annual tax return. Business expenses are deductible if properly documented. Accumulated losses may be carried forward for up to five years.
SME Eligibility Criteria for 3% Corporate Tax (as per Omani Law)
A company will be considered a qualifying SME (Small and Medium-sized Enterprise) and benefit from the 3% tax rate only if it meets all of the following four conditions:
- The company’s annual gross revenue does not exceed OMR 100,000
- It employs no more than 3 Omani nationals
- It does not operate in restricted sectors, such as banking, insurance, oil and gas, or financial services
- It is legally registered and submits its tax declarations on time
Value-Added Tax (VAT)
VAT has been in effect in Oman since 2021, with a standard rate of 5%. Several goods and services are exempt, including healthcare, education, pharmaceuticals, exports, and certain real estate transactions.
| Topic | Details |
|---|---|
| Standard VAT Rate for Goods and Services | 5% |
| Exempted Goods and Services | Healthcare, education, exports, medicines, some real estate transactions |
| Mandatory Registration Threshold | OMR 38,500 per year |
| Voluntary Registration Threshold | OMR 19,250 per year |
| VAT Filing Frequency | Quarterly via the official Tax Authority portal |
VAT registration is mandatory for companies with an annual turnover exceeding OMR 38,500. Businesses with a turnover above OMR 19,250 may also register voluntarily. VAT returns are usually submitted quarterly via the official online portal of the Tax Authority.
Excise Tax on Select Products
| Product Type | Tax Rate |
|---|---|
| Cigarettes, Tobacco | 100% |
| Energy Drinks | 100% |
| Sugar-Sweetened Beverages | 50% |
| Alcohol, Pork | 100% |
Since 2019, Oman has implemented excise tax as a measure to control the consumption of harmful products. This tax applies to items such as:
- Tobacco and cigarettes
- Energy drinks
- Sugar-sweetened beverages
- Alcohol and pork products
Excise tax rates can go as high as 100%, depending on the category of goods.
Stamp Duty on Property and Share Transfers
A 3% stamp duty is levied on the transfer of ownership of real estate, land, or certain types of company shares. This fee is usually collected during the formal registration of documents with the municipality or relevant authorities.
For detailed information on legal property ownership requirements in Oman, visit our page on [Buying Property in Oman].
Tax Rates in Oman – 2025
For investors and entrepreneurs, understanding the current tax rates is essential for making informed decisions when launching or expanding a business in Oman. Below is a summary of the official tax rates for the year 2025:
(Table of Oman’s 2025 tax rates to be inserted here)
| Tax Type | Base Rate | Brief Description |
|---|---|---|
| Corporate Income Tax | 15% | Standard rate for all companies operating in the mainland |
| Preferential SME Tax | 3% | For small enterprises with income below OMR 100,000 |
| Oil & Gas Company Tax | 55% | For companies operating under oil and gas contracts with the government |
| Value Added Tax (VAT) | 5% | Applies to taxable goods and services; unified fixed rate |
| VAT Exemption | 0% | Includes some healthcare, education, exports, and pharmaceuticals |
| Excise Tax | Up to 100% | Covers tobacco, energy drinks, alcohol, pork |
| Stamp Duty | 3% | Applies to property, land, and certain share transfers |
Key Notes:
- Personal income remains tax-exempt (until the 2028 law is enforced)
- The 3% corporate tax rate is reserved exclusively for qualified SMEs
- Free zone businesses may benefit from full tax exemptions (see next section)
- Companies with multiple income streams may fall under several tax categories
Taxation in Oman’s Free Zones
Oman’s free zones are designed to attract foreign investment and play a vital role in national strategiesOman’s free zones are designed to attract foreign investment and play a vital role in national strategies to boost exports and employment. These zones offer highly competitive tax incentives and simplified administrative processes.
For a complete overview of legal structures and licensing requirements, refer to our guide: [How to Register a Company in Oman’s Free Zones]
Free Zone Tax Benefits:
- ✅ 100% exemption from corporate income tax
- ✅ Full VAT exemption
- ✅ No customs duties on imported raw materials or machinery
- ✅ Repatriation of profits without restrictions
- ✅ Direct access to logistics and infrastructure hubs
Conditions to Qualify for Free Zone Exemptions:
The company must not sell directly within Oman’s mainland market. If goods are transferred to the local market, customs duties and VAT will apply.
The business must be registered within an officially designated free zone, such as Sohar, Duqm, Al Mazunah, or Salalah.
Activities must fall within approved categories, such as manufacturing, re-export, assembly, logistics, and similar.
(Table comparing free zone vs mainland companies to be inserted here)
| Criteria | Free Zone Company | Mainland Company |
|---|---|---|
| Corporate Income Tax | Exempt up to 10 years (extendable to 25 years with Omanisation targets met) [Source] | 15% (3% for eligible SMEs) [Source] |
| VAT | 0% (exempt) [Source] | 5% (mandatory registration over OMR 38,500) [Source] |
| Access to Omani Market | Only via branch in mainland or 5% customs duty [Source] | No restrictions |
| Auditing & Reporting | Simpler, with fewer requirements | Strict auditing and annual reporting required |
| Foreign Ownership | 100% allowed for business activities | 100% allowed in most activities |
| Customs Exemptions | Exempt from import/export duties [Source] | 5% import duty |
| Minimum Capital Requirement | No minimum capital required [Source] | May be required |
| Omanisation Rate | Lower; tax exemption increases with Omanisation rate [Source] | Subject to national requirements |
Tax Obligations for Expats and Foreign Workers
Oman offers a simple and transparent tax environment for expatriates and foreign professionals. To attract international talent and streamline work migration, the system imposes no direct personal income tax on individuals.
Current Personal Income Tax Status:
- No tax on salaries, wages, bonuses, or professional service income
- No tax on capital gains, rental income, or self-employment earnings if not registered as a business
Tax Implications When Registering a Business
If a foreign national registers a company or independent business in Oman, they become subject to corporate tax rules (either 15% or 3% for SMEs). This entails the following responsibilities:
- Obtaining a Tax Identification Number (TIN)
- Registering for VAT if annual income exceeds the threshold
- Filing annual tax returns
Social Security and Deductions
Foreign employees are not subject to Oman’s mandatory social security contributions. Employer contributions apply only to Omani nationals. However, some companies may offer private insurance or implement optional payroll deductions for their foreign staff.
Oman’s Tax System Compared to GCC Countries
A comparison between Oman’s tax system and those of other GCC member states reveals that Oman offers one of the most transparent, simple, and competitive tax frameworks in the region.
Corporate Tax Rates – GCC Countries
| Country | Corporate Income Tax Rate | Brief Description |
|---|---|---|
| Oman | 15% (3% for eligible SMEs) | Fixed and transparent rate; exemptions in free zones |
| Saudi Arabia | 20% | Plus zakat for Saudi nationals |
| United Arab Emirates | 9% from June 2023 onwards | Previously tax-free; now applies to profits over AED 375,000 |
| Qatar | 10% | Applies only to income of resident foreign companies |
| Kuwait | 15% | Applies only to foreign companies |
| Bahrain | 0% | No corporate income tax; only VAT is applicable |
VAT Rates – GCC Countries
| Country | VAT Rate | Status |
|---|---|---|
| Oman | 5% | Implemented since April 2021 |
| Saudi Arabia | 15% | Increased in July 2020 |
| United Arab Emirates | 5% | Implemented since January 2018 |
| Qatar | Planned | Expected implementation in 2025 |
| Kuwait | Planned | Implementation date not finalized |
| Bahrain | 10% | Increased from 5% to 10% in 2022 |
Why Is Oman More Attractive by Comparison?
- Transparent, simple, and stable tax rates, especially compared to volatile jurisdictions such as Saudi Arabia or Bahrain
- No personal income tax for individuals (until 2028 for high earners)
- Extensive tax exemptions for free zone companies
- Low VAT rate (5%) and simplified compliance procedures
Tax Violations and Penalties in Oman
While Oman offers a structured and investor-friendly tax regime, it also enforces a set of strict tax compliance rules and penalties to ensure fairness and proper governance.
Key Tax Violations and Penalties
| Violation Type | Description | Penalty or Sanction |
|---|---|---|
| Failure to Register for Tax | Not registering on time for VAT or Corporate Tax | Fine up to OMR 5,000 or imprisonment up to 1 year |
| Failure to Submit Tax Return | Not submitting the tax return within the legal deadline | Fine from OMR 100 to OMR 5,000 |
| Late Tax Payment | Delayed payment of due taxes | Annual interest for delay (approx. 1% per month) |
| Providing False Information | Submitting incorrect or misleading information to reduce tax liability | Double financial penalty and possible criminal prosecution |
Dispute Resolution and Penalty Procedures
- Official Notification:
Violations are first identified and formally communicated to the individual or company by the Tax Authority. - Right to Respond:
The party has a defined time window (typically 30 days) to submit documents or a written defense. - Final Review:
The Tax Authority evaluates the evidence and issues a final decision. - Appeals:
If the outcome is unsatisfactory, the taxpayer may appeal to the Tax Dispute Resolution Committee within the permitted timeframe. - Tax Court:
If no agreement is reached, the matter can be escalated to a specialized tax court for final adjudication.
Key Administrative Requirements:
- All tax returns and payments must be submitted via the official TAS platform
- Financial records must be kept for a minimum of 10 years
- Any major changes to company details (e.g., address, structure) must be reported to the Tax Authority within 30 days
Final Comparison: Oman vs. GCC Tax Landscape
The following summary illustrates Oman’s competitive tax positioning within the Gulf region:
Regional Comparison – Oman vs. GCC
| Indicator | Oman | Other GCC Countries |
|---|---|---|
| Personal Income Tax | Not applicable | Under planning (Qatar, Oman); some countries have none |
| Corporate Tax Rate | 15% (3% for SMEs) | UAE 9%, Saudi Arabia 20%, Qatar 10%, Kuwait 15% |
| VAT Rate | 5% | Saudi Arabia 15%, UAE 5%, Bahrain 10% |
| Free Zone Exemptions | Yes, up to 10 or 25 years | Yes, but often with stricter conditions |
| Foreign Investment Support | Very strong; 100% foreign ownership allowed in most sectors | Varies; some countries have restrictions |
| Cost of Living & Business Operations | Moderate and competitive | Higher in Saudi Arabia and UAE |
Oman’s Strategic Advantages for Investors
- Full tax exemptions in free zones for up to 25 years
- Legal stability and absence of abrupt policy changes
- Strategic location with access to Africa, Asia, and the Middle East
- Lower labor and operational costs compared to UAE or Qatar
- Active migration and investment incentives in sectors such as tourism, mining, and technology
Final Recommendation
For individuals seeking a stable environment with manageable costs and strong legal incentives, Oman presents an ideal destination for both investment and residency. A deep understanding of the tax framework, coupled with the right business structure, allows for long-term financial efficiency and compliance.
Conclusion
With a transparent tax system, reasonable rates, free zone exemptions, and no personal income tax until 2028, Oman ranks as one of the most attractive countries in the Gulf for investors and economic migrants.
The country offers substantial advantages for both small enterprises (SMEs) and large-scale investors, thanks to proactive government support, a pro-business legal structure, and predictable tax policy.
By carefully planning your legal and financial setup—and fulfilling all tax obligations—you can build a profitable, sustainable, and growth-oriented business in Oman.
This guide has been designed to assist you in making informed decisions, serving as a practical resource for navigating Oman’s tax environment with confidence.