Oman Tax Regulations and Rates (as of 2024)
Oman’s tax system is relatively straightforward compared to many other countries, focusing primarily on corporate income tax and withholding tax, with no personal income tax for individuals. Here’s a detailed overview of Oman’s tax regulations and rates:
1. Corporate Income Tax
Taxable Income
Corporate income tax applies to the taxable income of businesses operating in Oman. This includes revenue from commercial, industrial, or professional activities.
Tax Rates
- Standard Rate: 15% on taxable income.
- Small Businesses: Special provisions exist for small businesses (with gross revenue not exceeding OMR 100,000, capital not exceeding OMR 50,000, and employees not exceeding 15). The rate for these small businesses is 3%.
Exemptions
- Certain types of income are exempt, including dividends received by Omani companies from other Omani companies and income from eligible GCC countries under specific conditions.
2. Withholding Tax
Applicable Payments
Withholding tax applies to specific payments made to foreign persons and entities without a permanent establishment in Oman.
Rates
- Dividends: 10%
- Interest: 10%
- Royalties: 10%
- Fees for Services: 10%
Exemptions
- Payments to entities in countries with double taxation agreements (DTAs) may be exempt or subject to reduced rates depending on the treaty provisions.
3. Value Added Tax (VAT)
Rate
- Standard Rate: 5% on most goods and services.
Registration Threshold
- Mandatory registration for businesses with annual turnover exceeding OMR 38,500.
- Voluntary registration allowed for businesses with turnover exceeding OMR 19,250.
Exemptions and Zero-Rated Supplies
- Certain supplies are exempt, such as financial services, healthcare, and education.
- Exports of goods and international services are generally zero-rated.
4. Customs Duties
Rates
- Standard customs duty is 5% of the cost, insurance, and freight (CIF) value of imported goods.
- Specific goods may have higher or lower rates, and some are exempt.
5. Excise Tax
Rates
Excise tax applies to certain harmful goods:
- Tobacco products: 100%
- Energy drinks: 100%
- Carbonated drinks: 50%
- Alcohol: 100%
- Special purpose goods (such as luxury items): Rates vary.
6. Social Security Contributions
Contributions
Employers and employees must contribute to social security for Omani employees:
- Employer Contribution: 11.5% of the employee’s gross salary.
- Employee Contribution: 7% of the employee’s gross salary.
7. Zakat
Applicable Entities
Zakat, an Islamic charitable obligation, is required for certain types of income and assets held by companies registered in Oman. It is calculated at 2.5% of the zakatable amount.
8. Economic Substance Regulations
Applicability
Entities engaged in certain business activities, such as banking, insurance, shipping, and others, must meet economic substance requirements by demonstrating substantial activities and economic presence in Oman.
9. Filing and Payment
Corporate Income Tax
- Due Date: Tax returns must be filed within 6 months after the end of the financial year.
- Payment: The tax must be paid at the time of filing the return.
VAT
- Filing Frequency: Quarterly for businesses with annual supplies over OMR 1 million; otherwise, annually.
- Due Date: Returns are due by the end of the month following the tax period.
10. Penalties and Enforcement
Penalties
- Late Filing: Penalties are imposed for late filing of returns.
- Late Payment: Interest is charged on late payments of tax due.
11. Double Taxation Agreements (DTAs)
Benefits
Oman has DTAs with various countries to avoid double taxation and prevent tax evasion. These agreements can provide relief from double taxation and may reduce or eliminate withholding taxes on certain payments.
12. Resources
- Oman Tax Authority: https://tms.taxoman.gov.om/portal/web/taxportal/
- Ministry of Finance: https://mof.gov.om/
Conclusion
Oman’s tax system is characterized by a straightforward approach focusing on corporate income tax, withholding taxes, VAT, and specific excise taxes. There is no personal income tax, making it an attractive location for expatriates. Businesses must comply with filing and payment deadlines and stay informed about any legislative changes to maintain compliance with Omani tax regulations.