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Who really pays? Inside Oman’s Income Tax model with real-world scenarios

As Oman prepares to roll out its personal income tax framework, the Tax Authority has released real-life scenarios to clarify how the system works, who is liable, and how deductions and exemptions can significantly reduce or eliminate tax obligations for most residents.

TAS News Service

info@thearabianstories.com

Thursday, June 26, 2025

MUSCAT : According to the Tax Authority, personal income tax in Oman is applied progressively and considers several exemptions and deductions before determining the final amount due. The authority emphasizes that 99% of the population will not be subject to tax under the current structure, especially when common expenses and family-related costs are factored in.

In one scenario, an engineer with a total monthly income of RO 4,000 (RO 3,500 from a full-time job and RO 500 from freelance work) earns an annual income of RO 48,000. After the exemption limit, only RO 6,000 is considered net income. Once expenses such as RO 2,000 in family health insurance and RO 4,000 in children’s private school tuition are deducted, the remaining taxable income drops to zero—meaning no tax is paid.

In another example, a businessman earning RO 100,000 annually is subject to income tax after standard exemptions and deductions. Once RO 42,000 is exempted and an additional RO 5,000 in zakat and official donations are deducted, the taxable income stands at RO 53,000. At the 5% tax rate, the total tax due amounts to RO 2,650.

The Tax Authority encourages residents to familiarize themselves with the rules and deduction categories, which include health insurance, education, and charitable giving through registered channels. By doing so, many will find they fall outside the taxable bracket—or owe only a nominal amount.

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