Last modified: 16/01/2025 08:19

Corporate

taxation

	Rate
Corporate income tax rate	15%
Branch tax rate	15%
Capital gains tax rate	15%

¹The tax rate for taxpayers engaged in petroleum exploration shall be 55% of the taxable income in respect of any income derived from the sale of petroleum.

Residence: Taxpayer is resident of Oman if the entity is incorporated or registered in Sultanate of Oman and includes permanent establishments (‘PE’) of foreign entities as well.

Basis: Resident entities are taxed on their worldwide income. However, certain locally derived income for certain specified categories of income and activities are exempt from tax. Foreign entities are taxed on permanent establishment (based on fixed place in Oman, service-based PE and agency PE) based in Oman.

Taxable income: Corporate income tax is imposed on the taxpayer’s net profit before taxes computed as per IFRS including business income, passive income and capital gains. Foreign sourced income is included in taxable income. Expenses are deductible unless otherwise specified to be non-deductible. Gains or losses on revaluation and unrealized gains / loss on conversion of currency into OMR are disregarded for tax purposes. The corporate tax is determined based on the Parent company’s standalone financial statements and not the consolidated financial statements.

Significant local taxes on income: All income (including capital gains) is taxed at 15%. Small taxpayers as defined under the Income Tax Law can apply lower tax rate of 3% if prescribed threshold limits are complied with. Small taxpayers can also claim the benefit of tax at 0% if, in addition to the threshold stated above, at least 2 owners / partners (working on a full-time basis) are Omani persons.

Alternative minimum tax: Not applicable

Taxation of dividends: Dividends received by an Omani company, a PE or a sole proprietorship established in Oman from shares, allotments or shareholding owned in the capital of another Omani company are exempt from tax. Dividends earned from foreign companies are subject to tax.

Capital gains: All capital gains on sale of assets are considered as part of the overall taxable income and are taxed at 15%. However, profits or gains from disposal of securities listed in the Muscat Securities Market are exempt from tax.

Losses: Losses can be carried forward up to 5 years from the year in which loss in incurred. However, no losses can be carried forward if such loss was incurred from carrying on business exempted from tax. No carry back of losses permitted.

Foreign tax relief: Any foreign taxes paid on worldwide income can be reduced from the tax payable on its taxable income in Oman for the tax year in which income charged to the foreign tax forms part of the taxable income. However, specific approval from the Tax Authority of Oman is required to be obtained within a period of 2 years from the end of the tax year during which the foreign tax is paid if there is no DTAA signed between Oman and the relevant foreign jurisdiction.

Participation exemption: Not applicable

Holding-company regime: Not applicable

Tax-based incentives: – Tax exemption for 5 years is available for the companies registering their main activity in the industrial (manufacturing) sectors. Net tax losses incurred during the exemption period can be carried forward indefinitely until it is set off against subsequent profits; and – Specified activities exempted from tax (such as shipping activities, investment funds dealing in Omani securities listed in Muscat Securities Market, etc.).

Group relief/fiscal unity: There is no relief provided to group companies on a consolidated basis. Tax is charged on each entity on a standalone basis.

Small company/alternative tax regimes: Small taxpayers as defined under the Income Tax Law can apply lower tax rate of 3% if prescribed threshold limits are complied with. Small taxpayers can also claim the benefit of tax at 0% if, in addition to the threshold stated above, at least 2 owners / partners (working on a full-time basis) are Omani persons.

Corporate taxation: compliance

Tax year: Period of 12 months commencing from the first of January and ending at the end of December of any calendar year. Accounting period is defined as period of 12 months (except in the year of incorporation, the first accounting period can be less than 12 months and up to a maximum 18months). The taxpayer can decide on the accounting year other than January to December (calendar year).

Consolidated returns: Not applicable

Filing and payment: Filing of annual return of income and payment of taxes is due within 4 months from the financial year end of the entity. For ‘enterprises’ which claims the benefit of lower tax rate of 3% or 0%, filing of annual return of income and payment of taxes is due within 3 months from the financial year end.

Penalties: Additional tax of 1% per month is levied for delay in payment of taxes from the due date of payment to the date of actual payment of taxes. Based on the non-compliances, separate penalties (ranging from RO 100 to RO 50,000) are applicable as well.

Rulings: Not applicable

Taxation of individuals

No taxes on income earned by individuals. However, individual taxation is proposed to be implemented soon.

Residence: Although there is currently no individual taxation in Oman, the tax residency for an individual is defined under the amendments to the Executive Regulations of the Income Tax Law (Article 18 bis of RD 118/2020) as a natural person residing in Oman during the tax year for not less than 183 continuous or interrupted days during the tax year

Basis: Not applicable

Taxable income: Not applicable

Capital gains: Not applicable

Deductions and allowances: Not applicable

Foreign tax relief: Not applicable

Taxation of individuals: compliance

Tax year: Not applicable

Filing and payment: Not applicable

Penalties: Not applicable

Rulings: Not applicable

Withholding taxes

Type of payment	Resident recipients		Non-residents recipients which do not have a PE in Oman3
	Company	Individual	Company	Individual
	Rate (%)	Rate (%)	Rate (%)	Rate (%)
Royalties	NA	NA	10%	10%
Consideration for research and development	NA	NA	10%	10%
Consideration for the use of or right to use computer software	NA	NA	10%	10%
Fees for management or performance of services (whether the services are performed in Oman or abroad) 1	NA	NA	10%	10%
Dividends and interest 2	NA	NA	NA	NA

1. Following services do not fall under the purview of WHT;

• participation in organizations, conferences, seminars or exhibitions;
• training;
• transportation and shipment of merchandise and its related insurance;
• air tickets and boarding costs abroad;
• meetings of Board of Directors;
• reinsurance payments; and
• any services provided linked to a business or property located outside Oman 

2. Based on a circular issued by Capital Market Authority (CMA) on 15 May 2019, WHT on dividends and interest has been suspended for a period of 3 years from 6 May 2019 to 5 May 2022. The Economic Stimulus Plan issued by the Ministry of Finance has announced that the suspension of withholding tax on dividends on shares and interest shall be extended for 5 years effective from year 2020. In other words, the suspension of WHT on dividends and interest was extended till 31 December 2024. On 11 January 2023, Royal directives have stated that WHT implications on dividends and interest would stand withdrawn.

3. The Tax Authority of Oman announced the suspension of withholding tax (WHT) that was imposed on the lease of ships, aircraft, and aircraft engines, effective from 29 December 2022.

4. The WHT rates specified under the Double Taxation Avoidance Agreement (DTAA) can be applied subject to prior approval from the TA.

Filing and payment: Remittance of WHT should be made by the Omani Company to Tax Authority through on-line submission of WHT return within 14 days from the end of the month in which the transaction was accrued or paid, whichever is earlier.

Penalty: TA is also likely to levy penalty at 1% per month on the withholding tax amount payable for the period between the due date and date of actual payment in case of delay in remittance of withholding tax.

Branch remittance tax: Please refer the withholding tax rates applicable for remittances.

Anti-avoidance legislation

Transfer pricing: No transfer pricing regulations or documentation requirements have been issued by the Tax Authority of Oman as yet.

However, related party transactions have to be carried out on arm’s length basis. Country by Country Reporting (CbCR): Oman has joined the Inclusive Framework on Base Erosion and Profit Shifting (IF on BEPS) project by the Organization for Economic Cooperation and Development (OECD) and the G20.

As part of the implementation, Oman introduced Country by Country Reporting (CbCR) requirements applicable for reporting years beginning on or after 1 January 2020 vide Ministerial Decision 79/ 2020. CbCR is applicable for multinational entities (MNE) operating in various jurisdictions that have a total consolidated revenue that is equal to or more than OMR 300 million for the financial year preceding the reporting year concerned. If the MNE group fulfills the above conditions, the entity in Oman being a Ultimate Parent Entity (UPE) / Surrogate Parent Entity (SPE) / constituent entity, would be required to comply with the applicable CbC reporting requirements.

Common Reporting Standards (CRS): The Central Bank of Oman implemented the Common Reporting Standards (CRS) regime in Oman, setting out rules for automatic exchange of information through the CRS. All Financial Institutions (FIs) operating in Oman are required to collect CRS related information for new account holders starting from 1 July 2019. Top up tax on Entities of Multinational Groups (MNEs): On 31st December 2024, Oman announced the implementation of minimum Top-up Tax of 15% on Multinational Groups (MNEs) in line with GloBE rules to combat base erosion and profit shifting. This applies to MNEs that yield revenue exceeding Euro 750 million annually. The Oman Tax Authority is yet to issue executive regulations to implement this Law. This step is taken as a commitment to the BEPS Pillar 2 which aims to ensure an appropriate level of tax is paid by MNEs through a series of measures aimed at modernizing the international tax system.

Interest restriction: Finance charges paid to related parties would be allowed as a deduction only if the debt equity ratio of the taxpayer is below 2:1. Thin capitalization rules are applicable to all companies from the year 2012. Accordingly, the TA restricts the finance charges paid to related parties that are claimed as a deduction from the taxable income by applying the thin capitalization rules specified in the Income Tax Law. All interest-bearing loans are normally considered as borrowings for the purpose of computation under thin capitalization rules. The thin capitalization rules will be applicable irrespective of the substance of the transactions and means of availing the loan.

Controlled foreign companies: No such regime.

Hybrid mismatches: No special rules.

Disclosure requirements: The UPE of MNE Groups which exceeds the threshold of OMR 300 million and which are tax residents in Oman are required to file a CbC report within 12 months after the end of the financial year concerned on the AEOI portal (Automatic Exchange of Information). There is an option to the MNE Groups to file the CbCR in Oman through SPE or local constituent entities subject to certain conditions. Any constituent entity which is not a UPE or SPE, shall notify the Oman tax authority of the identity of the UPE or SPE, which will submit the CbCR on behalf of the Group and the tax residence of such UPE or SPE, no later than the last day of the reporting year of such MNE Group.

Exit taxes: Only for corporates at the same rates as income taxes. In case of companies under liquidation, all pending tax dues and assessments have to be completed to obtain the tax clearance certificate.

General anti-avoidance rule: Oman has not yet ratified the MLI [Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion & Profit Shifting (BEPS)], nor indicated the date on which it will enter into force. The ratification of MLI is expected to ensure compliance at a global level and reduce the opportunity for tax avoidance by multinational organizations.

Digital services tax and Other significant anti-avoidance legislation: Not applicable

Value-added tax/Goods and services tax

Type of tax: Value added tax (VAT) applies to supplies of most goods and services supplied in Oman and to imports. There is a broad range of exempt supplies and zero-rated supplies (exempt but allowing for deduction of input tax). The following supplies shall be exempt from VAT in accordance with the conditions and controls determined by the Regulations: 1. Financial services. 2. Healthcare services and related goods and services. 3. Educational services and related goods and services. 4. Undeveloped land (bare land) 5. Resale of residential properties. 6. Local passenger transport. 7. Rental of properties for residential purposes. The following supplies are subject to tax at zero rate in accordance with the limits, conditions and circumstances determined by the Regulations: 1. Supply of food items as specified by a decision from the Chairman of the Tax Authority 2. Supply of medicines and medical equipment in accordance with the rules determined by the issuance of a decision by the Chairman and after coordination with the specialized authorities. 3. The supply of investment gold, silver and platinum. 4. Supplies of international and intra GCC transport of goods or passengers and supply of services in connection with this transport. 5. The supply of air, sea and land means of transport that are designated for the transportation of passengers and goods for commercial purposes and the supply of goods and services related to transport. 6. The supply of rescue planes, and rescue and assistance boats. 7. The supply of oil, oil derivates and natural gas.

Standard rate: 5%

Reduced rates: 0%

Registration: VAT registration in Oman falls into two categories i.e. mandatory registration and voluntary registration: Mandatory registration – Every person residing in the Sultanate is required to register by applying the following tests: • Backward look: if the total value of supplies made in the current month plus the previous 11 months exceeds the mandatory VAT threshold of OMR 38,500; or • Forward look: If it is expected that the total value of supplies to be made in the current month plus the next 11 months would exceed the mandatory VAT threshold of OMR 38,500. These tests must be carried out on a monthly basis by any unregistered person engaged in an economic activity. A non-resident taxable person making any taxable supply in the Sultanate, is required to register regardless of the turnover. Voluntary registration – Every person residing in the Sultanate is allowed to register voluntarily by applying either one of the following tests: • Backward look: a) If the total value of supplies made in the current month plus the previous 11 months exceed the voluntary VAT threshold of OMR 19,250 • Forward look: a) If it is expected that the total value of supplies to be made will exceed the voluntary VAT threshold of OMR 19,250 in the current month plus the next 11 months.

Filing and payment: VAT returns would be due to be filed within 30 days from the end of each Calander quarter. The due date for payment of VAT liability is same as the due date for filing of VAT returns which is as follows: – Q 1 (January to March) – Due on or before 30th April – Q 2 (April to June) – Due on or before 30th July – Q 3 (July to September) – Due on or before 30th October – Q 4 (October to December) – Due on or before 30th January of following year

Social security contributions

	Employer	Employee
	Rate (%)	Rate (%)
Social security (Note 1 below)	12.5%	8%
Insurance for maternity/paternity leave (Note 2 below)	1%	0%
Insurance for sick/extraordinary leave (Note 2 below)	1%	0%

Note 1

As per the Oman Labour Law regulations and Social Insurance Law, contributions are required to be made to the Public Authority for Social Insurance (PASI).

It is towards Social Insurance Authority for Omani employees wherein 8% (including 1% towards Job Security Fund) of the monthly gross salary (subject to a limit of gross salary of RO 3,000) are to be contributed by the employee and 12.5% by the employer. The 12.5% comprises of the following:

Social security	11.00%
Occupational injury and disease	1.00%
Job security	0.50%
Total	12.50%

This is the pension fund for Omanis employees working in private sector where the employee has to contribute 8% of the monthly gross salary and the employer to contribute 12.5%.

Note 2

With effect from July 2024, for all employees (Omani and expatriate), employer is required to pay 1% per month of monthly gross salary (subject to a limit of gross salary of RO 3,000) as insurance for maternity/paternity leave. Further with effect from July 2025, employer is required to pay additional 1% per month of gross salary (subject to a limit of gross salary of RO 3,000) paid to employees as insurance for sick/extraordinary leave.

Note 3

For expatriate employees, at the time of expiration of the contract, the Company is required to pay gratuity which is based on the last basic salary drawn and number of years worked. The gratuity payable comprises of full month’s basic salary with respect to each completed year of service by the employee.

Self-employed

Not applicable

Other taxes

Capital duty: Not applicable

Immovable property taxes: Not applicable. However, a property transfer fee is applicable on transfer of land and property at 3% of the value to be paid to the Ministry of Housing.

Transfer tax: Not applicable

Stamp duty: Not applicable

Net wealth/worth tax: Not applicable

Inheritance/gift taxes: Not applicable

Other: Effective from 15 June 2019, Oman has introduced Excise tax on specific goods levied at the following rates: Alcoholic beverages* (w.e.f. 1 July 2020)- 100% Energy drinks – 100% Pork and pork products – 100% Tobacco and tobacco products – 100% Carbonated drinks – 50% Sugar sweetened beverages (w.e.f. 1 October 2020) – 50% *Initially excise tax rate for alcoholic beverages was set at 100% and then was temporarily reduced to 50% and later reinstated at 100% from 1 July 2020. Registration: Any business that imports excise goods into Oman, produce excise goods released for consumption in Oman, stockpiles excise goods in Oman is required to obtain excise registration. Filing of Excise Tax return: Excise tax returns are required to be filed on quarterly basis within 30 days from the end of each quarter. – Q 1 (January to March) – Due or before 30th April – Q 2 (April to June) – Due on or before 30th July – Q 3 (July to September) – Due on or before 30th October – Q 4 (October to December) – Due on or before 30th January of following year Digital tax stamp scheme for Excise products: The Tax Authority of Oman had implemented the Digital Tax Stamp system for excisable products, including cigarettes, shisha, and other tobacco products. In July 2023, the TA aimed to expand this system to include carbonated drinks, energy drinks, and sweetened beverages. In October 2024, the TA announced that every entity should co-ordinate with the product manufacturers to ensure that all excisable products imported into Oman from 1 February 2025, carry the necessary tax stamps. Products without tax stamps will not be released by Customs for sale in the local market of Oman. Municipal taxes apply (ranging from 3% to 10%). Restaurants / cafes located within a tourist area or managed through franchise agreements are required to levy tourism tax at 4%. Tax card: Ministerial Decision 27/2020 has been issued in the Official Gazette regarding activation of tax card. The tax card will be valid for a period of 2 years from the date of issuance and on expiration of the aforementioned period, the tax card shall be deemed cancelled or invalid. The application for renewal should be made at least 1 month before expiry of the tax card. The renewal of tax card shall be subject to compliance with liabilities imposed by Law and modifications to the particulars in the tax card should be notified to the TA.

Tax treaties

Oman has concluded Double tax treaties with 43 countries: Algeria, Belarus, Brunei, Canada, China, Croatia, Egypt, France, Hungary, India, Iran, Italy, Japan, Korea, Lebanon, Mauritius, Moldova, Morocco, Netherlands, Pakistan, Portugal, Qatar, Russia, Seychelles, Singapore, South Africa, Spain, Sri Lanka, Sudan, Switzerland, Syria, Thailand, Tunisia, Turkey, United Kingdom, Uzbekistan, Vietnam, Yemen, Ireland, Estonia, Cyprus, Tanzania and Bahrain.