A Landmark Tax Shift in the Gulf

Oman has announced the implementation of a Personal Income Tax (PIT) law, making it the first Gulf Cooperation Council (GCC) country to do so. This is a historic move for the GCC. This strategic fiscal reform, which was announced in Royal Decree No. 56/2025 on June 22, 2025, is a big change in the country’s economy. The new legislation was presented on the 29th of June 2025, and will go into operation on January 1, 2028. This gives consumers and companies just a brief but essential amount of period to get prepared.

Oman’s decision to change its tax-free income model is a sign that it needs to diversify its sources of income and rely less on hydrocarbons. The 5% income tax rate, which only applies to people who make more than OMR 42,000 a year (about USD 109,200), is one of the lowest in the world. The Oman Tax Authority says that more than 99% of the people will not be affected. They say this is a socially-sensitive policy that targets high earners while protecting the welfare of lower-income groups.

This blog talks about the main parts of the new Personal Income Tax system, what it means, and how people and businesses can get ready for it, especially with the help of professional services like Launch Business Solutions.

Who Will Be Taxed? Understanding Income, Exemptions, and Deductions

People need to know a few new financial and legal terms that the new law brings:

• Gross Income: This is the total amount of money and other benefits a person gets in a year.
• Net Income: Oman has a high-income threshold because it lets people keep OMR 42,000 of their gross income.
• Taxable Income: This is the amount of money that is left over after subtracting exemptions, losses, and allowed expenses from gross income.
• Tax Due: Taxable Income × 5% tax rate.

The tax only applies to natural people (individuals) who make more than OMR 42,000 a year. There are a lot of deductions and exemptions that go into figuring out taxable income. This makes sure that everyone is treated fairly and that some types of income don’t have to pay taxes.

Exemptions include:

• Income earned outside Oman (granted once, for a two-year period).
• Capital gains from the sale of a primary residence.
• One-time exemption on capital gains from selling a secondary residence.
• Income from inheritance and gifts.
• Income from industrial property rights (exempted for five years from the date of registration).

Deductible Expenses include:

• Education and healthcare costs.
• Zakat, charitable donations, and endowments (waqf).
• Interest on loans used to finance the construction or purchase of a primary residence (one-time deduction).

These carefully crafted exemptions and deductions indicate that Oman is not only focused on revenue generation but also on equity, public welfare, and protecting the financial burden of essential personal expenses.

Impact on Individuals and Employers: Why Early Planning Is Crucial

Oman’s new personal income tax means that both people and businesses have to follow new rules. This change will have a big impact on how employers, especially those in HR, payroll, and finance, structure pay, run payroll systems, and write contracts.

Employers will need to:

• Change employment contracts to meet PIT requirements.
• Set up payroll withholding systems to make sure that tax deductions are made on time.
• Teach the HR and finance teams how to follow the rules and report their personal taxes.
• Look over expatriate packages and incentive plans again, especially for people who make a lot of money.

For individuals:

• It’s important to look at all sources of income, both local and foreign.
• Taxpayers need to keep track of their deductible expenses in order to lower their tax bill.
• If you get your money from renting out property, intellectual property royalties, or capital gains, you need to figure out how your income is taxed and what type it is.

The following two and a half years are very important because the law will go into effect in 2028. The grace period gives people time to reorganise their businesses, plan their finances, and learn how to avoid breaking the law or getting fines when it goes into effect.

It’s also important to remember that executive rules about how to handle procedures and reports should be released within a year of the law being published in the Official Gazette. These rules will make it even clearer when taxes are due, what needs to be done for an audit, and how to enforce the rules.

How Launch Business Solutions Helps You Prepare for Personal Income Tax in Oman

The new Personal Income Tax in Oman can be hard for both people and businesses to deal with. This is where Launch Business Solutions comes in as a reliable compliance partner that can help you get ready for, adjust to, and stay ahead of regulatory requirements.

Our services include:

• Analysing income and figuring out how much PIT tax an individual or executive owes.
• For employers, planning how to restructure payroll and follow the rules.
• Systems for keeping track of documents for deductible expenses and exemptions.
• Workshops to train HR and finance teams on new tax processes.
• Help with figuring out how much money you make in different countries, especially for expats.
• Updates and explanations of new executive rules in real time.

Launch Business Solutions offers personalised advisory services to help you make smart choices, whether you are a high-income person, a property owner, a business leader, or an employer of international staff. Because the tax law has a long lead time, this is a great chance to make the change carefully and with a plan. If you ignore this window, you might make decisions too quickly, make mistakes, or miss out on deductions, which will cost you a lot in the long term. Let Launch Business Solutions give you the tools and information you need to fulfil all your needs with confidence and clarity.

The introduction of a personal income tax in Oman is not just a change in the law; it’s a change in the way things work. It shows that the country is moving towards fiscal maturity, a wider range of income sources, and social and economic balance. And even though it may seem scary right now, with the right help, early planning, and expert advice, people and businesses can not only follow the rules, but also do well under the new system.