Oman’s corporate tax landscape, anchored by the standard Oman Corporate Tax Rate 15%, is central to doing business in the Sultanate. While the rate is straightforward, achieving full compliance with the Income Tax Law (Royal Decree 28/2009, as amended) requires adherence to strict deadlines, accurate financial reporting, and a clear understanding of what constitutes taxable income.
This guide provides essential compliance advice for businesses subject to the 15% rate, ensuring you meet the requirements of the Oman Tax Authority (OTA).
Key Compliance Pillars for the Oman Corporate Tax Rate 15%
All entities operating in Oman, whether resident companies or foreign branches, are subject to Corporate Income Tax (CIT) on Oman-sourced income (and worldwide income for Omani entities), unless they qualify for the reduced rate or specific exemptions.
Mandatory Registration and Tax Deadlines
Compliance begins with timely registration and meeting the annual filing and payment obligations:
Tax Registration: All entities must register with the OTA within 60 days of establishing the business or commencing taxable operations, regardless of profitability.
Annual Tax Return Filing (Standard 15% Rate):
The final Corporate Tax Return of Income must be filed with the OTA within four months from the end of the financial year.
Example: For a fiscal year ending December 31, 2024, the deadline is April 30, 2025.
Provisional Return: Some businesses are required to file a Provisional Return within the first three months of the tax year, detailing estimated taxable income.
Tax Payment: The tax due is a self-assessment and must be paid in full to the OTA by the final filing deadline (i.e., within four months of the year-end). Late payment incurs an interest penalty of 1% per month on the outstanding amount.
Note: Businesses that meet the specific criteria for Small and Medium Enterprises (SMEs) are subject to a reduced 3% tax rate and have a slightly earlier filing deadline of three months from the year-end. Foreign-owned entities do not qualify for the 3% rate.
Required Documentation and Financial Records
To support the Oman Corporate Tax Rate 15% filing, companies must submit comprehensive documentation:
Audited Financial Statements: The Annual Return must be accompanied by audited accounts prepared by a qualified auditor registered in Oman. These statements must comply with International Financial Reporting Standards (IFRS) or other standards approved by the OTA.
10-Year Record Retention: Businesses are legally required to maintain all accounting records and supporting documentation (invoices, contracts, etc.) for a period of ten years following the end of the relevant accounting period.
Transfer Pricing and Withholding Tax: Additional 15% Compliance Focus
Beyond the annual return, the OTA focuses heavily on cross-border transactions and payments to non-residents.
Navigating Transfer Pricing Regulations
Oman strictly enforces the arm’s-length principle for all transactions between related parties (e.g., a local company and its foreign parent or subsidiary).
Compliance Action: Companies must maintain robust Transfer Pricing Documentation (local file/master file) that clearly demonstrates that related-party transactions (loans, services, IP transfers) are priced as if they were between independent entities.
OTA Scrutiny: The Tax Authority actively scrutinizes related-party dealings, and non-compliance can lead to profit re-assessment and penalties.
Withholding Tax (WHT) Obligations
Payments made by an Omani entity (subject to the 15% rate) to a non-resident that does not have a Permanent Establishment (PE) in Oman are subject to WHT at a rate of 10% on the gross amount.
WHT Taxable Payments: This typically applies to:
Royalties
Fees for management or performance of services
Consideration for Research and Development (R&D)
Consideration for the use of software
Compliance Action: The Omani company is responsible for deducting the 10% WHT and remitting it to the OTA within 14 days from the end of the month in which the payment was made or credited. Failure to withhold and remit makes the Omani company liable for the tax plus penalties.
New Global Minimum Tax: Pillar Two Impact
While the local Oman Corporate Tax Rate 15% remains the standard, Multinational Enterprises (MNEs) with global revenues exceeding €750 million must be aware of Oman’s new Pillar Two legislation (Royal Decree No. 70/2024), effective January 1, 2025.
Supplemental Tax and the 15% Minimum
Oman introduced a Supplemental Tax (Domestic Minimum Top-Up Tax and Income Inclusion Rule) to ensure that in-scope MNEs are taxed at a minimum Effective Tax Rate (ETR) of 15% globally.
Compliance Action: MNEs operating in Free Zones, which traditionally enjoyed tax holidays (0% CIT), must now assess their ETR under the Pillar Two rules. The new legislation is designed to ensure Oman retains the right to tax the profits of MNE constituent entities up to the 15% minimum.
Compliance with the Oman Corporate Tax Rate 15% is a continuous process. Businesses must proactively manage their accounting, documentation, and reporting to align with local law and evolving international standards.
