Tax
What is corporate tax imposed on and what is the rate?Generally, a corporate tax rate of 15% is applicable on the taxable income of any institution, Omani company or settled establishment in Oman. The income tax rate is applicable to all types of entities, irrespective of whether such entities are registered in the region or not.
Are there any exemptions or tax holidays available?A special rate of 3% may be available for small-medium enterprises such as Omani proprietorships and certain limited liability companies (“LLCs”), provided the following requirements are satisfied:
Initial registered capital does not surpass OMR 50,000 at the commencement of the tax year;Gross income remains below OMR 100,000 for each tax year;
The average workforce size throughout the tax year remains under 15;
Taxpayer operations exclude air/sea transportation, natural resource extraction, banking, insurance, financial services, public utility concessions, or any other activities determined by the Minister of Finance, subject to approval by the Council of Ministers.
Are businesses that are engaged in extracting natural resources (e.g., oil and gas) subject to different tax rates?Yes, income derived by companies from the sale of petroleum are subject to tax at the rate of 55%. The tax rate is applicable on income as stipulated by the individual Exploration and Production Sharing Agreements between the Omani government and the respective petroleum-selling entity.
When are corporate tax return filings and payment due?The initial and final tax returns are required to be submitted electronically to the Omani tax authority.The initial tax return should be submitted in respect of any tax year within three months commencing from the end of the tax year. The final tax return should be submitted in respect of any tax year within six months commencing from the end of the tax year.
Are cross-border payments subject to any withholding or retention?Non-resident entities without a permanent establishment in Oman are subject to withholding tax at the rate of 10% on certain categories of Omani-sourced income, including royalties, consideration for research and development, management fees and service fees. Typically, the Omani company making the payment to the non-resident party is required to deduct and withhold the tax at source.
Under Ministerial Decision No. 14 of 2019 (Amending the Provisions of the Executive Regulations of the Income Tax Law), withholding tax (WHT) is imposed on dividends paid to non-residents. Circular E/32017 clarifies that such withholding tax applies to dividends distributed by Omani joint-stock companies and dividends paid under the provisions of the Commercial Companies Law. This rate does not apply to dividends paid to citizens of other GCC member states (i.e., Bahrain, Kuwait, Qatar, Saudi Arabia and the UAE).
However, the Oman Capital Markets Authority (CMA) issued a notification that suspended this dividend WHT for a 3-year period starting from May 6, 2019. In alignment with the 'Oman Vision 2040,' aimed at revitalizing the country's economy in response to the COVID-19 pandemic, this suspension has been extended for an additional 2 years, continuing until the 2024 tax year.
Are individuals subject to personal income tax?Individuals in the Sultanate of Oman are not subject to personal income tax. Discussions have arisen regarding the potential possibility of imposing personal income tax on the income of wealthy individuals in the region. Although this has not yet been implemented, such tax may be imposed in the future.
Does Oman have transfer pricing requirements?Yes, the Oman has transfer pricing (“TP”) rules in place. According to the Oman TP rules, transactions and arrangements between related parties should be conducted on an arm’s length basis.
What are the transfer pricing documentation requirements in Oman?Where a taxpayer belongs to multinational groups headquarted in the Oman and have a total consolidated group revenue of AED 3.15 billion or above, a Country-by-Country report (CbCR) and CbCR notification are required to be submitted.
Certain supplies are exempt from VAT , which include financial services, healthcare services and related items, bare land, etc. Zero-rated supplies include certain food items, supply of medicines and medical equipment, Supply of investment gold, silver, and platinum, etc.
What is VAT/sales tax imposed on and what are the rate(s)?VAT has been implemented in the Sultanate of Oman on 16 April 2021. Unless the supply is specifically zero rated or exempt, VAT is imposed on the supply of goods of goods and services in the Sultanate of Oman as well as imports of goods and services. The standard rate of VAT is 5%.
Certain supplies are exempt from VAT, which include financial services, healthcare services and related items, bare land, etc. Zero-rated supplies include certain food items, supply of medicines and medical equipment, Supply of investment gold, silver, and platinum, etc.
When are VAT/sales tax return filings and payment due?The due date for filing a VAT return and payment of any VAT due is 30 days from the end of the VAT period.
Is there any real estate transfer tax imposed on the transfer or sale of real estate?The transfer of land and property is subject to a 3% property transfer fee, which must be paid to the Ministry of Housing.
Is there any excise tax imposed? What are the rate(s)?The following goods are subject to excise tax:
Energy drinks – 100%;
Tobacco and its derivatives – 100%;
Carbonated beverages - 50%.
Special purpose goods, which encompass alcohol and pork products - 100%.
What is subject to custom duties and what are the rate(s)?Customs duty is imposed at a 5% rate on imports based on the cost, insurance and freight (CIF) invoice value, unless there is a special provision in a Free Trade Agreement between Oman and the other country. Certain goods may be subject to different custom duty rates.
Are there any payroll taxes or social security contributions required in Oman?Omani nationals are subject to a 17.5% social security contribution, while expatriate employees are exempt from this requirement. Out of this contribution amount, employees are responsible for a 7% share of their salary, while the remaining 10.5% is covered by the employer.
Similarly, individuals from other Gulf Cooperation Council (GCC) countries (such as Saudi Arabia, the UAE, Qatar, Bahrain, and Kuwait) who reside and work in Oman must adhere to the social security contribution regulations set by their respective home countries. They are obligated to contribute a percentage of their Oman-earned salary to their relevant government authorities.
Are there any other taxes or reporting regimes that businesses should be aware of in Oman?
Municipal taxes are applicable to various items at the following rates:
Property rents: 3%.
Hotel occupancy: 5%.
Leisure and cinema establishments: 10%.
