Exempt income
Is end of service gratuity taxable?
The situation
Pensions and end of service gratuities are listed as taxable sources, while retirement contributions and some items are exempt.
The law
- Personal Income Tax Law, Royal Decree 56/2025 (rate and threshold): 5 percent on income above OMR 42,000 a year; residents taxed on worldwide income after 183 days
What it means for you
EY lists pensions and end of service gratuities among taxable income sources, while some items such as retirement contributions are exempt. A gratuity paid in 2028 or later may count toward the OMR 42,000 threshold. Check the executive regulation for detail.
What to do
- Estimate gratuity after 2027.
- Check the executive regulation.
- Include if required.
- Plan exit timing with advice.
We can do this for youPersonal income tax readiness for 2028 (Royal Decree 56/2025): OMR 150