Oman Income Tax for Individuals and Businesses

Oman’s tax system is a central feature of its economic strategy, designed to support a stable environment for foreign investment and business development. The country has structured its tax policies to align with its long-term economic diversification goals. This framework influences how businesses operate and structure their finances within the country.

Taxation of Individuals

Oman has not levied personal income tax on salaries and wages. However, a draft law approved in early 2025 awaits implementation and is expected to apply a 5% tax to foreign workers earning over OMR 50,000 annually. There are no taxes on income from personal capital gains, wealth, or property.

Income an individual generates from conducting business activities is treated differently, as this income falls under corporate tax rules. A sole proprietor’s net profits are subject to the regulations governing business income.

Corporate Income Tax Framework

The standard corporate income tax (CIT) rate in Oman is 15% on taxable profits. A reduced rate of 3% is available for small and medium-sized enterprises (SMEs) that meet specific criteria, such as having registered capital of OMR 60,000 or less and gross income not exceeding OMR 150,000. The standard rate applies to Omani companies and foreign companies that conduct business through a permanent establishment, like a branch or office.

Omani companies are taxed on their worldwide income, while permanent establishments of foreign companies are taxed only on income from Omani sources. To determine taxable income, businesses can deduct legitimate expenses like employee salaries and rent. Capital expenditures and specific fines or penalties are not deductible.

Withholding Tax on Foreign Payments

Oman levies a withholding tax (WHT) on certain payments made to foreign entities that do not have a permanent establishment in the country. The payer in Oman is responsible for deducting this tax and remitting it to the Oman Tax Authority. A WHT rate of 10% is applied to the gross amount of payments for royalties, management fees, research and development, and service fees.

A Royal Directive permanently suspended the withholding tax on dividends and interest paid to non-resident investors. Failure to deduct and pay the required WHT can result in penalties for the payer.

Business Tax Compliance

All businesses operating in Oman must register with the Oman Tax Authority to obtain a tax card. This registration is a foundational step for tax compliance and is required before commencing commercial activities. Companies are required to file a provisional tax return within three months of the end of their accounting period and make an estimated tax payment.

The final annual income tax return, accompanied by audited financial statements, must be submitted within six months of the financial year-end. Any remaining tax liability must be settled with this final return. Adherence to these deadlines is necessary to avoid penalties for late filing or payment.