Sultanate of Oman
Navigating international regulations with confidence
Currency
Omani Rial – OMR
Official Language
Arabic
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Fiscal Year
1 Jan - 31 Dec
Payroll Frequency
Weekly, Bi-weekly & Monthly
Tax System and Regulations
Income Tax Structure
Oman’s tax system is primarily corporate-focused, with companies subject to corporate income tax on business profits. Employers are not required to deduct income tax from employees’ salaries, as the country does not currently impose personal income tax (PIT) on individuals. Employers are, however, required to comply with statutory obligations such as social security contributions for Omani employees and adherence to labour and immigration laws, but this will change under Royal Decree 56/2025, published on 30 June 2025. From 1 January 2028 a flat 5 % personal income tax (PIT) will apply to annual earnings above OMR 42 000. The tax covers residents (183‑day rule) and non‑residents on Oman‑sourced income, with expected deductions for dependents, pension contributions and charitable donations. This makes Oman the first Gulf Cooperation Council nation to tax personal income, targeting high-income earners.
Payroll Taxes
Payroll taxes are limited, as there is currently no PIT in effect. However, employers are required to make statutory contributions on behalf of Omani employees to the Social Protection Fund (SPF). Currently, this includes a total contribution of 21.5% of the employee’s gross salary, with employers contributing 13.5% and employees 8% to the SPF. A planned 1% employer contribution for sickness and other leaves, originally scheduled for 1 July 2025, has been postponed until further notice. SPF contributions cover pension, disability, work injuries and diseases, unemployment and maternity/paternity leave. Expatriates are exempt from these contributions.
Tax Reporting and Payment Deadlines
Since Oman does not currently have a PIT system, employers are required to comply with corporate tax obligations, including filing income tax returns within four months after the end of the financial year (typically by 30 April), with payment due at the time of filing. Social security contributions for Omani employees, managed by the SPF, are submitted monthly, with payments due by the 15th of the following month. Late payments attract a surcharge of 13.5% per month. Employers should prepare for the upcoming PIT regime taking effect on 1 January 2028 under Royal Decree 56/2025, which will require withholding and remittance of PIT for high-income earners, with annual returns due by 30 June following the end of the tax year.
Compliance and Record-keeping
Payroll providers and employers must maintain comprehensive documentation and records to ensure compliance with tax, labour and social security regulations. This includes accurate payroll records, employment contracts, wage payment confirmations, working hours, leave balances and social security contributions. These records must be retained for at least ten years. Employers must also comply with the labour law requirements such as maintaining records of disciplinary actions, end-of-service benefits, and employee health and safety measures. These records must be readily available for inspection by the Ministry of Labour. Non-compliance can attract fines, business restrictions or legal action. Repeated breaches can lead to blacklisting or licence suspension.
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