Taxation in Oman: An Expat Guide

Oman has always been a nation built on commerce.

From the seafaring merchants of ancient Majan to its 18th-century empire stretching down the Swahili Coast, the Sultanate has long understood the power of trade and its ability to connect civilisations, build wealth, and shape identity.

That commercial instinct didn’t vanish with empire.

It evolved, and in the modern era, it underpins Oman’s transformation from an isolated desert state into one of the Gulf’s quiet success stories.

Much of that progress came during the 50-year reign of Sultan Qaboos bin Said, who opened the country to the world while preserving its cultural authenticity. Today, his successor, Sultan Haitham bin Tariq, continues that legacy – but with a sharper eye on diversification, sustainability, and foreign investment.

If you’re an expat or global entrepreneur, Oman’s current trajectory is worth watching.

Oman Vision 2040 – the country’s long-term blueprint for national development – aims to shift the economy away from oil dependency and towards something smarter, leaner, and more competitive.

Knowledge, technology, logistics, and private-sector innovation are the new pillars of that shift, alongside a wave of legal, regulatory, and tax reform.

In 2021, Oman introduced a Value Added Tax (VAT) at a flat 5%.

Low by global standards and structured to exempt essentials like food, medicine, education, and housing, it brought Oman in line with its GCC neighbours – albeit with a gentler touch.

The year before, Oman enacted a new Foreign Capital Investment Law, removing legacy restrictions and allowing 100% foreign ownership across a broad range of sectors. Investors responded with interest.

Labour reforms followed in 2023, modernising employment regulations and making it easier for foreign companies and workers to operate legally and securely.

Combined, these reforms have created an environment that’s both more modern and more accessible. The world has noticed, and foreign investment is on the rise, as is the number of expats looking to do business or build a life here.

But perhaps Oman’s biggest draw isn’t what it taxes – it’s what it doesn’t.

There is currently no personal income tax in Oman. Salaries, dividends, rental income, investment gains — all remain tax-free for expats and residents alike.

That may soon change.

A draft income tax law aimed at high earners has passed Oman’s Parliament and is awaiting final review. If implemented, Oman would become the first GCC nation to introduce personal income tax – a clear step toward long-term fiscal sustainability in a post-oil future.

So, what does this mean for expats and investors?

The Nomad Capitalist team has put together this in-depth guide to break down everything you need to know – from Oman’s current tax rules and recent changes to what the proposed income tax could mean for your finances and future.

Whether you’re considering relocating, investing, or simply planting another flag, it’s crucial to understand how Oman’s fiscal landscape is shifting.

Change is coming in this corner of the Gulf, and those who prepare early stand to benefit the most.

How do Taxes in Oman Work? 

The most significant point for expats is the current absence of a personal income tax on salaries or personal investment income, although the potential introduction of one for high earners is worth watching. 

The main direct tax levy on businesses is corporate income tax, which is generally charged at a standard rate of 15% on profits exceeding certain thresholds.

Since 2021, VAT has been applied at 5% on most goods and services. 

Oman also charges a 10% Withholding Tax (WHT) on certain payments like royalties and service fees made to foreign companies without a permanent base there. 

Beyond that, you’ll encounter customs duties (typically 5%) on imported goods and municipal taxes, often applied to property rentals. 

Oman’s Income Tax Rates for Expats

There are no personal income tax levies in Oman, meaning expats are not taxed on their income. 

In fact, even for Oman nationals, the only taxable income rate they’ll ever pay is an 8% social security contribution. 

However, a new law has been drafted that proposes a 5% tax on high-income earners’ annual taxable income. The implementation of this rule will vary for both citizens and expats. 

In theory, Omani nationals will have a flat tax rate of 5% imposed on their worldwide gross income over US$1 million. Meanwhile, expatriates maiy be taxed on any earnings above US$130,000, a decision that other Gulf countries may examine closely.

What are Oman’s Corporate Tax Rates? 

While personal income remains untaxed for now, Oman does levy taxes on businesses and consumption. 

The headline corporate income tax rate is 15%, which applies to the taxable profits of all companies, organisations and permanent establishments operating within Oman, whether Omani-owned or foreign branches. 

Even so, a preferential rate of just 3% is available for smaller Omani corporate entities that meet specific criteria such as having registered capital of OMR 50,000 (around US$130,000) or less, annual revenues not exceeding OMR 100,000 and employing 15 or fewer people. 

It’s worth noting that certain strategic sectors, such as manufacturing, tourism, logistics and fishing, may qualify for temporary tax exemptions.

A distinct regime applies to businesses involved in petroleum exploration and production. Income derived from the sale of Omani oil and gas is subject to a notably higher Petroleum Income Tax rate of 55%.

Beyond direct corporate taxes, VAT is a major component of Oman’s fiscal system. Businesses with annual taxable supplies exceeding OMR 38,500 must register for VAT, while those exceeding OMR 19,250 can register voluntarily.

Oman charges the usual GCC Customs Duty rate of 5% on most goods that are brought in from outside the Gulf Cooperation Council.

When it comes to property, Oman stands out as it levies no annual property tax. However, upon the sale and registration of land or property, a 3% property transfer fee is payable to the Ministry of Housing.

Other taxes businesses might encounter include a 4% tourism tax levied by hotels, relevant restaurants, and various municipal taxes. The most common municipal tax for expats is the 3% charge applied to the value of annual property rental contracts. 

Municipalities also levy taxes on hotel stays (5%) and entertainment venues (10%).

Finally, social security contributions are mandatory, but only for Omani employees. Employers contribute 12.5% of an Omani employee’s salary, while the employee contributes 8%.

Expatriate workers are entirely exempt from these contributions.

How to Become a Tax Resident in Oman?

Because Oman doesn’t currently charge personal income tax, defining your exact tax residency status isn’t as important day-to-day as simply having legal residency. 

However, Oman does have a formal definition, which is mainly used for things like tax treaties. 

Usually, you’re considered a tax resident if you spend at least 183 days in Oman during a year, whether you stay all at once or spread it out. Your main home or where your key personal and financial ties are could also play a role, especially for applying treaties or if income tax rules change later. 

For now, the important thing is securing a residency visa, which allows you to live and work in Oman under the current zero personal tax setup.

Oman’s Residency Programs

Most expats living in Oman get their residency through a standard two-year employment visa arranged by their employer. 

However, Oman also offers the Investor Residency Programme (IRP) for investors and retirees, which provides renewable visas lasting either five or ten years.

To qualify for the ten-year visa (Tier 1), you typically need to invest OMR 500,000 (around US$1.3 million) or more. This investment can be in Omani property (in specific zones), an Omani company or government bonds. 

Alternatively, setting up a company that hires at least 50 Omanis can also qualify you. 

The five-year visa (Tier 2) has a lower investment threshold, generally OMR 250,000 (around US$650,000) in property or a local company. 

Retirees over 60 with a proven income of OMR 4,000 per month can also apply for this five-year option. 

Starting your own business, especially now that 100% foreign ownership is allowed in many fields, fits naturally into these investment pathways. 

Once you have residency, you can usually sponsor your immediate family members and bring them over as well.

Taxation in Oman: FAQs

Go Where You’re Treated Best

Right now, Oman offers a very attractive setup for many expats and investors. 

With no personal income tax currently, a stable atmosphere, growing ease of investment (including 100% foreign ownership options) and clear routes to long-term residency, it’s a solid choice in the Gulf region. 

The main question mark hangs over the potential introduction of personal income tax. 

If Oman presses ahead and becomes the first GCC country to tax individual earnings – even if only for top earners initially – it would be a major change. 

This move could make Oman less competitive compared to its neighbours, such as the UAE, Qatar, and Saudi Arabia, which remain income-tax-free for now. 

It creates uncertainty and makes Oman a place to monitor carefully. 

And while other Gulf nations say they have no plans for income tax, we saw how the introduction of VAT spread across the region, suggesting tax policies can shift over time.

Of course, your options aren’t limited to the Gulf. 

If your absolute top priority is minimising tax, you might consider more traditional tax havens. Places like Monaco, the Cayman Islands, Bermuda and the Bahamas all feature zero income tax, capital gains tax and inheritance tax. 

To make things even simpler, many Caribbean islands also offer easy citizenship-by-investment programs. 

In the end, deciding where to go involves balancing factors such as taxes, lifestyle, business opportunities, residency rules, and how stable you feel the situation is long-term. 

There’s no single ‘best’ answer – only the answer that’s best for you. 

Making sense of the global options and understanding the nuances of tax laws, residency requirements, and future trends can be daunting. That’s exactly why you need help from experts like our team at Nomad Capitalist. 

We work with you to understand your priorities and build a tailored plan to help you legally go where you’re treated best.