Understanding Taxation in Oman: Complete 2024 Guide

1. Corporate Taxation System in Oman

Oman’s taxation system operates under Royal Decree No. 28/2009 (Income Tax Law) and subsequent amendments. The framework for taxation in Oman is designed to attract foreign investment while maintaining fiscal stability. Key characteristics include:

📌 Worldwide income taxation for Omani-registered entities
📌 Territorial taxation for foreign branches and PEs
📌 Uniform tax treatment across commercial activities

The taxation authority in Oman (Tax Authority) mandates that all businesses operating beyond a 183-day period must register for taxation purposes. This applies particularly to foreign companies engaged in:

Construction projects
Service contracts
Consultancy agreements

2. Oman Income Tax Rates 2024

Standard Corporate Tax

15% Flat Rate

Applies to:

Foreign companies
Joint stock companies
Branches of GCC companies

SME Tax Regime

3% Reduced Rate

Eligibility criteria:

≤ 60,000 OMR registered capital
≤ 150,000 OMR annual revenue
≤ 25 employees

Excludes: Banking, Insurance, Oil/Gas sectors

3. Petroleum Taxation in Oman

Oman’s taxation system for hydrocarbon activities features unique provisions:

55% Base Tax Rate

Applied through Production Sharing Agreements (PSAs) that determine:

Cost recovery mechanisms
Profit oil/gas splits
Royalty calculations

Recent reforms in Oman taxation for energy companies include:

Enhanced oil recovery (EOR) tax credits
Carbon reduction incentives
Local workforce development deductions

4. Tax Compliance in Oman

Oman’s tax administration requires:

Filing Deadlines

March 31: Annual return submission
Monthly/Quarterly: Withholding tax payments

Key Requirements

Audited financial statements
Tax computation reports
Transfer pricing documentation

⚠️ Penalties: 1% monthly interest on overdue taxes + 25% to 100% fines for non-compliance

5. Tax Incentives in Oman

Oman taxation system offers numerous incentives:

Free Zone Benefits

10-25 year tax holidays
Customs duty exemptions

Sector-Specific Incentives

Tourism: 5-year exemptions
Manufacturing: Duty-free imports
Renewables: Accelerated depreciation

6. Municipal Taxation

While Oman maintains no local income taxes, businesses must consider:

3% Municipal fees on commercial rentals
5% Tourism tax on hotel services
Environmental levies for industrial operations

Empowering Your Business with Certified Point: Mastering Taxation in Oman