Oman's 2028 income tax and what it means for property investors now.

Royal Decree No. 56/2025 establishes Oman as the first GCC state to introduce a personal income tax. The headline terms are narrow by design.

• The rate. A flat 5% on annual gross income above OMR 42,000 (about $109,200).
• The start date. 1 January 2028. Because the law was issued in June 2025, that leaves a runway of roughly two and a half years to plan, not a defined statutory transition.
• Who is affected. About the top 1% of earners, Omani and expatriate alike. The Tax Authority states that around 99% of residents fall below the threshold.
• The next milestone. The Executive Regulations, due within a year of publication and so expected around mid-2026, will confirm deductions, exemptions, procedures and return forms. Reported reliefs cover categories such as education, healthcare, housing and donations, but final scope and caps are set there.

The measure sits inside Oman Vision 2040, the strategy to broaden the economy beyond oil and gas. The design points to a careful first step: a high threshold on gross income, expected deductions, and a long lead time before collection begins.

This is where the legacy reading of the law went wrong, and where property investors should focus. The Personal Income Tax Law defines gross income across eleven sources, and two of them matter directly for real estate: leasing (rental) income, and proceeds from the disposal of real-estate assets. Both count toward the OMR 42,000 threshold from 2028.

So the often-repeated claim that "rental income and capital gains stay tax-free for individuals" is true only before 2028, and only below the threshold. From 1 January 2028, a high earner whose total gross income from salary, rent, disposals and other sources tops OMR 42,000 is taxed at 5% on the excess. The law softens this for homeowners with specific carve-outs.

• Primary residence. A sale of the primary residence is exempt, subject to a holding period set in the regulations and reported as around two years.
• Secondary residence. A sale of a secondary residence is exempt once in a lifetime.
• Deductions and losses. Leasing income and real-estate disposals allow expense deductions and can carry forward losses for five years, so it is net income, not gross proceeds, that bears the charge.
• Other disposals. Sales of additional investment property fall outside the residence carve-outs and count toward the threshold, taxed at 5% on the excess above OMR 42,000.

Read plainly: a buyer with one or two homes and modest rental income is unlikely to be affected, while an investor running a portfolio of rental units and trading property in their own name should model the 2028 position now. There is no personal income tax of any kind before 2028, and the carve-outs and deductions matter as much as the rate.

Outside the 2028 personal income tax, Oman keeps a set of investor-friendly settings that are intact for 2026. None of them is altered by the new law.

No inheritance tax.

Oman levies no inheritance tax and applies inheritance law from the owner’s country of origin, so property in a tourism complex can be bequeathed to heirs. It is a meaningful point for cross-generational planning, and it is unchanged.

A transfer fee, not a stamp duty.

Oman has no stamp duty. It charges a property transfer fee to the Ministry of Housing on registration. Foreign buyers pay 3%; the rate for Omani nationals was cut to 1% with effect from January 2025. On a OMR 100,000 home, a foreign buyer therefore pays OMR 3,000 in transfer costs.

VAT, with a first-supply nuance.

The 5% VAT introduced in April 2021 is standard-rated on commercial property. Residential resale is VAT-exempt, but the first supply of a new residential building from a developer attracts 5% VAT. That distinction matters for off-plan and new-build buyers, who should treat VAT as part of the entry cost rather than assume a blanket residential exemption.

Municipal rental tax.

A municipal tax of around 3% applies to gross rental income, separate from the 2028 personal income tax and unchanged for 2026.

Withholding tax suspended nationwide.

Withholding tax on dividends and interest paid to non-residents is suspended across Oman under a Royal Directive of January 2023. This is a country-wide policy, not a feature of any single free zone, and it is relevant to anyone structuring an investment through a corporate or fund vehicle.

Two threads run through the ownership map: where non-Omanis may take title, and which zones carry their own, mostly corporate, tax treatment. It is worth keeping the two apart, because retail property buyers and operating businesses benefit in different ways.

Integrated Tourism Complexes (ITCs). Non-GCC foreigners take freehold, or a 99-year usufruct, within designated ITCs. The recognised complexes now include Al Mouj Muscat, Muscat Bay, Muscat Hills, Jebel Sifah and AIDA, and they pair lifestyle appeal with eligibility for long-term residency. GCC nationals, by contrast, can now buy outside ITCs in most non-reserved areas, a widening of rights that the older "ITCs only" framing missed.

Golden Residency. Oman relaunched its Golden Residency in August 2025 with a lowered property threshold of OMR 200,000 (about $520,000) for a renewable 10-year permit that covers a spouse, children and first-degree relatives. For buyers weighing residency alongside yield, that threshold is the figure to plan against.

Duqm Special Economic Zone. Duqm grants income-tax exemption for up to 30 years (or the lease term, whichever is shorter, renewable), zero customs duties, 100% foreign ownership and full profit repatriation across roughly 2,000 square kilometres. These are enterprise incentives for businesses that set up in the zone, not benefits a retail property buyer captures directly, a distinction the legacy report blurred.

Sohar and Salalah free zones. Both offer long corporate tax holidays for qualifying businesses and underpin Oman’s logistics ambitions linking Asian, African and European markets. The nationwide suspension of withholding tax on dividends and interest applies here too, but it is a country-wide policy rather than a perk unique to these zones.

The policy arrives against a strengthening backdrop, with fresher data than the partial 2024 figures often quoted. Full-year 2024 real-estate trading reached about OMR 3.38 billion, up roughly 29.5% year on year from OMR 2.61 billion in 2023, with mortgage value up about 46.4% and foreign investment driving close to 70% of investment into the sector.

Momentum carried into 2025. NCSI and Savills data show residential prices rose about 7.3% year on year in the first quarter of 2025, led by residential land. On the sovereign side, S&P restored Oman to investment grade at BBB- in September 2024 and most recently affirmed BBB- with a stable outlook in March 2026, citing liquid government assets above 40% of GDP. The 2026 state budget targets around 4% GDP growth through 2030. None of this is disturbed by the personal income tax: there is no charge before 2028, the threshold sits high, and the residence carve-outs and deductions cushion the high earners who do fall in scope.

Read against both the timeline and the carve-outs, the picture sorts into four points.

• Most buyers are untouched. There is no personal income tax before 2028, and about 99% of residents fall below the OMR 42,000 threshold. A buyer with a home and modest rental income is unlikely to be affected.
• High earners must plan for 2028. From 2028, rental income and property-disposal proceeds count toward the threshold. An investor with several rental units and an own-name trading habit should model the net position, after expense deductions and loss carry-forward, rather than assume the old "tax-free" rule still holds.
• The residence carve-outs are the key lever. A primary-residence sale is exempt subject to the holding period, and a secondary residence is exempt once in a lifetime, so timing a disposal and choosing which property to designate matters.
• A planning runway, not a transition. The roughly two-and-a-half years to 2028, and the Executive Regulations due around mid-2026, give time to structure deliberately, including within free zones and ITCs.

For investors weighing entry while the runway is open, four approaches follow from the structure of the rules.

1. Use the residence carve-outs. Designate the family home as the primary residence and weigh the holding period before any post-2028 sale, and keep the once-in-a-lifetime secondary-residence exemption in reserve.
2. Model rental income net, not gross. From 2028, rental income counts toward the threshold, but expense deductions and a five-year loss carry-forward apply, so it is the net figure that bears the charge. Build that into yield expectations now.
3. Consider corporate structuring. Where an investment runs through a corporate or fund vehicle, the nationwide suspension of withholding tax on dividends and interest can improve net returns. This is a country-wide policy available today.
4. Position in tourism complexes. ITCs such as Al Mouj Muscat, Muscat Bay and AIDA offer freehold, prime gross yields around 6-8%, and eligibility for the OMR 200,000 Golden Residency, which pairs income with a residency route.

Most foreign-owned homes sit within ITCs in Muscat, so site selection is strategic rather than open, which also limits oversupply risk. The same demand drivers behind rising Oman property prices continue to underpin the case.

Set beside its neighbours, Oman offers a different profile: lower entry costs, a smaller and steadier demand base, and now a confirmed but narrow personal income tax that still compares well regionally.

• Yields and entry. Prime Muscat ITC yields run around 6-8% gross, while Oman typically carries lower entry costs than the larger regional markets. Treat these as indicative ranges that vary by asset.
• Market scale. A smaller resident base gives a more measured market than the UAE, which can favour investors seeking less crowded segments.
• Ownership scope. For non-GCC foreigners, freehold is concentrated in ITCs, which requires strategic site selection but also reduces oversupply risk. GCC nationals can buy more widely outside ITCs.

The comparison favours buyers who prioritise stability and a clear regulatory path over sheer depth, reinforced by the same tourism momentum charted in our coverage of Oman’s rising tourism.

The personal income tax is one instrument within a broader diversification programme, and the supply pipeline shapes where demand lands. The 2026 budget targets around 4% GDP growth through 2030, with tourism set for a rising share of GDP under Vision 2040, though the precise long-run targets vary by source and are best read as direction rather than a fixed number.

Infrastructure is the catalyst to watch. The Al Khuwair Downtown and Waterfront scheme in Muscat, a roughly $1.3 billion government-led project, was still in construction through 2025 and 2026. It is a future supply and infrastructure catalyst rather than a current income asset, and any yield figure attached to it before completion is speculative. The right way to weigh it is as a medium-term driver of demand around it, not a built rental play.

Alongside it, the push to become a logistics hub between Asia, Africa and Europe, and the steady build-out of tourism complexes, support rental demand across property types and through the cycle.

In a market moving toward a confirmed tax event, the investors who fare best share a consistent discipline. Four practices stand out.

• Watch the Executive Regulations. The detail on deductions, the residence holding period and return procedures lands around mid-2026 and will firm up any 2028 plan. Treat the current reliefs as indicative until then.
• Engage local expertise early. Municipal tax varies by location, and foreign ownership and structuring must be optimised within the legal framework. Local counsel resolves both.
• Use current advantages while the runway is open. The nationwide withholding-tax suspension, the residence carve-outs and the free-zone incentives reward investors who structure before 2028.
• Favour fundamentals over speculation. Property that supports Oman’s diversification, in tourism complexes and growth corridors, carries firmer long-term demand than purely speculative positions.

Before committing, three questions are worth answering honestly. First, income structure: if total gross income from salary, rent and disposals could exceed OMR 42,000 from 2028, factor the 5% charge into planning while using the deductions and carve-outs. Second, timeline: the window before 2028 allows deliberate positioning. Third, risk tolerance: Oman tends to offer less volatility than some regional markets while retaining growth potential. The live picture across the Oman market frames each of these.

Oman’s 5% personal income tax is a measured step toward diversification, not an aggressive bid for revenue. The high threshold, the residence carve-outs and the runway to 2028 all show consideration for investors, and about 99% of residents sit below the line.

The honest correction to the old story is this: rental income and property disposals are not permanently tax-free. From 2028 they enter the gross-income base for high earners, with the family home carved out and net income, not gross proceeds, taxed. Around that, the wider case holds: no inheritance tax, VAT-exempt resale homes, a nationwide withholding-tax suspension, prime yields near 6-8%, and a relaunched Golden Residency at OMR 200,000.

The work now is to read a specific situation against the 2028 rules and position accordingly, watching the Executive Regulations as they land around mid-2026. The years to 2028 are the time to make those decisions deliberately. Every figure here is indicative and not investment advice.