Income tax in Oman has been introduced since the beginning of 2022. The rate of income tax is uniform for all types of business entities, regardless of whether it is a corporate entity and/or whether it is registered or not.
The income tax rate is 15% for all taxpayers other than Omani proprietorships (‘establishments’) and limited liability companies (LLCs) that fulfil the conditions of small and medium enterprises (SMEs).
As per the Medium Term Fiscal Plan, the non-residents would pay an income tax of up to 15% for the country's corporate or commercial activities in Oman. But for its residents, it is another story. Like any tax-free country in the Middle East, the government of Oman does not impose a tax on the residents as the country is known for its oil and gas industry.
Personal income including income from capital gains, wealth, death, or property, is not taxed in the Sultanate of Oman. The Personal Income Tax (PIT) system, on the other hand, is being reviewed by the government after its incorporation in the 2020-2024 Medium Term Fiscal Plan. BMS Auditing is the best accounting and audit firm in Oman providing all the financial services under one roof.
Income Tax in Oman 2024
Taxable income is normally defined as the income of an individual or a company minus the tax deductions if any. It is the income made by an entity in a year on which the government imposes taxes, including salary, bonus, wages or commissions, etc.
Omani establishments and certain LLCs are required to meet the following conditions:
- Registered capital not exceeding 50,000 OMR at the beginning of the taxation year
- Gross income not exceeding 100,000 OMR
- The average number of workers or employees in a year does not cross 15
- Activities of the taxable person do not include air or sea transport, extracting natural resources, banking, insurance, or any financial services, any activity decided by the Ministry of Finance after approval from the Council of Ministers
What types of income will be taxed?
As previously stated, Oman has no PIT. The application of withholding tax or income tax, subject to tax treaty relief, must be reviewed in light of the individual's activities in Oman and the kind of income.
Income Tax Rate in Oman
The income tax rate is constant for all business entities, irrespective of being a corporate entity, registered or not.
The normal income tax for all the taxpayers in Oman is 15%, apart from Omani establishments and certain limited liability companies (LLCs) that fulfill the following conditions of small and medium businesses.
Up to 30,000 OMR (Omani Riyals) - 0%
Above 30,000 OMR - 12%
For Enterprise - 3%
Others - 15%
You may also note that the companies involved in the oil exploration industry will be imposed 55% depending on the income from the sale of oil.
What categories are exempted from Income Tax in Oman?
- Income earned from practicing maritime transport activities
- Income earned by a foreign citizen from maritime or air transport activities
- Income from investment funds established in Oman based on the Capital Market Law, or funds established abroad and dealing with Omani securities mentioned in the Muscat Securities Market
- Five years exemptions for Industrial projects (non-renewable), based on the rules and regulations of the Finance Council and Energy Resources
Income Tax Law in Oman
Tax Assessment
Tax Authority assesses the tax on the taxable person who is liable to present the return of the income according to the law. While the taxable person submits the final returns of the income the assessment would be made in the next ten years from the end of the taxable year. In case the assessment was not made during the term, taxable income or loss mentioned in the return of income would be considered as the assessment.
If the return of income is not submitted, the assessment would be made ten years from the end of the year, by which the return of income should be submitted.
Tax Authority sends the assessment notice to the taxpayer by post to the address known to the authority. Assessment is written, and it includes the amount of taxable income or loss, with the date of assessment, and the due date of payment.
Excess Tax Refund
According to the law of Oman, the taxpayer has the right to get the refund of excess tax paid by applying to the Tax Authority within five years from the end of the year in which the refund rights come into action. In case of non-submission of this application, the taxpayer loses his right to a refund.
Withholding Tax
Tax is imposed on various types of income for a foreign person not having a permanent establishment on the following:
- Royalties
- Consideration for conducting Research & Development
- Usage or right to use computer software
- Management fees or performance of services
- Dividends on shares or interests
Implementation of Income Tax with BMS Oman
BMS Auditing Oman advises the clients about the tax implications at the initial stage and suggests suitable company structures. The BMS's team that provides excellent taxation services in Oman also advises on forms to be filled, the authorities to be filed and their frequency. With the office in Oman, BMS is much closer to its clients with a better understanding of the laws and regulations of the country.
Need help with taxes for your corporate company? Come to BMS Oman and you will be well-versed with all the regulations of the country through our experts. BMS in Oman is offering other tax and financial services as well such as auditing services, accounting services, VAT services, excise tax services, feasibility study services and much more.
