Tax in GCC
- Overview of tax in GCC
- Taxes in UAE
- Taxes in Saudi Arabia
- Taxes in Qatar
- Taxes in Oman
- Taxes in Kuwait
- Taxes in Bahrain
Taxes in Oman
The Secretariat General for Taxation (SGT) is responsible for applying and regulating the relevant taxation laws in Oman. Tax investigation and assessments are made by the Directorate General within the SGT. Both the SGT and the Directorate General departments are considered branches of the Ministry of Finance of Oman.
Excise tax is implemented in Oman with effect on 15 June 2019 in accordance with the unified GCC Excise Tax Agreement, making Oman the fifth GCC country to implement excise tax. A 100% excise tax will be applied on tobacco products, energy drinks and meat, while a 50% tax will be applied on carbonated drinks.
Currently, Oman does not impose VAT in its territory.
Oman has issued a decree to start levying a 5 % value-added tax (VAT) in six months’ time (by 2021) to offset a slump in oil prices and an economic downturn exacerbated by coronavirus.
The tax will be on most goods and services, though with some exceptions. Essential food items, medical care, education and financial services will be exempt from the planned levy, according to a royal decree detailing the tax.
Income is currently not subject to personal income taxes in Oman and there is no requirement to file income tax returns.
Currently, the main tax cost to businesses in Oman is corporate income tax (Corporation Tax), applicable at a rate of 15% on all taxable profits (a special provisional rate of 55% applies to income derived from the sale of petroleum).
A 3% tax rate applies to Omani proprietorships (establishments) and to LLCs which meet the following requirements:
- Registered capital does not exceed OMR 50,000 at the beginning of the tax year
- Gross income does not exceed OMR 100,000
- Average number of employees during the tax year does not exceed 15
- Property rents: 3%.
- Hotel occupancy: 5%.
- Leisure and cinema houses: 10%.
- Management fees
- Fees for the performance of services
- Participation in organizations, conferences, seminars and exhibitions
- Insurance thereon
- Air tickets and accommodation abroad
- Board of directors’ meetings
- Reinsurance payments
- Services in connection with an activity or property outside Oman
- Consideration of fees used for research and development
- Fees for the use of or right to use computer software
- Dividends and interests (suspended with effect from 6 May 2019 through a Royal Directive)
* The 3% tax rate is effective for years beginning on or after 1 January 2017 and is coupled with a requirement for small taxpayers to file income tax returns.
** Corporate income tax is charged on all sources of income (including capital gains) of a company or an establishment or a Permanent Establishment, earned in Oman. A Permanent establishment (‘PE’) is defined as a fixed place of business through which a business is wholly or partly carried out in Oman by a foreign person.
Tax Exemptions in Oman
Tax exemptions have been generally annulled by the introduction of Royal Decree 09/2017. The only category now eligible for exemption is industrial (manufacturing) activities. Exemptions will no longer be available for mining; export of locally manufactured goods; operation of hotels and tourist villages; agriculture; fishing; or education.
Double Taxation Treaties
Tax-treaties are agreements that take place between two nations to avoid double-taxation from both the countries during the import-export procedure. Till now, Oman has signed more than 30 tax treaties with multi-nations that have become a plus point for entrepreneurs and businesspersons to expand it to the countries at a faster pace.
Capital Gains Tax
The Sultanate of Oman does not levy any taxes on income from capital gains. There are also no payroll taxes in Oman other than social security contributions.
Social Security Contributions
A 17.5% social security contribution is applicable to employees who are Omani nationals, but not to expatriate employees. The employee pays a contribution of 7% of salary, and the employer pays the balance of 10.5%. The employer is also required to contribute for insurance for work-related injuries in the amount of 1% of the salary of the employee. This brings the total monthly social security and insurance contributions to be made by the employer to 11.5%.
Property Transfer Tax
There are no property taxes in Oman.
There is also no inheritance tax.
Municipal taxes apply to the following items:
Stamp duty is applicable on transfer of land and property at 5% of the value.
The standard custom duty rate in Oman stands at a rate of 5%. Import and export of certain items like alcohol, tobacco, etc. need to bear a rate of 100%.
Restaurants, hotels and cafes are obligated to pay a 4% fee to the ministry from 1 January 2020.
Withholding tax in Oman stands at a rate of 10% that is to be paid to the government by the taxpayer of the income which involves dividends, interest, royalties, and professional fees, which is to be submitted to the Secretarial General, within the duration of 14 days.
Withholding tax is applied at source to amounts paid or credited to foreign persons that do not have income attributed to a permanent establishment in Oman for the following categories of income:
There are exemptions allowed here for the following purposes
A tax card system is introduced whereby all taxpayers (Omani companies, establishments and permanent establishments) will be issued with tax cards and new taxpayers must apply for a tax card at the time of commercial registration.
The tax card number must appear on all contracts, invoices, and tax authority correspondence. Government entities must obtain a copy of the tax card before dealing with a taxpayer. Failure to comply with tax card provisions may result in a fine of up to OMR 5,000.