Oman Taxes for Businesses and Individuals

Oman’s tax system is structured to be straightforward and supportive of investment. While it offers several tax advantages, a formal and modernizing tax framework governs commercial activities. This system is undergoing gradual changes aimed at diversifying the economy and reducing its reliance on hydrocarbon revenues.

Personal Taxation Framework

Historically, Oman has not levied a personal income tax on its residents or non-resident individuals. However, the country is in the final legislative stages of introducing a personal income tax on high-income earners, a notable development in its fiscal policy.

The primary mandatory contribution for individuals is related to social security, which is required for Omani nationals to fund social protection programs. The system also extends to nationals of the Gulf Cooperation Council (GCC) countries working in Oman, who are subject to the social security regulations of their home country. For most other expatriates, there is no requirement to make social security contributions in Oman.

Corporate Income Tax

The standard Corporate Income Tax (CIT) in Oman is a flat rate of 15% on taxable profits. This rate applies to all business entities, including limited liability companies, joint-stock companies, and branches of foreign companies. An exception is for companies in petroleum exploration and production, which are subject to a 55% rate.

To support smaller businesses, preferential tax rates are available. A 0% tax rate applies to businesses with a gross income up to OMR 30,000. A 3% rate is available for Small and Medium Enterprises (SMEs) that meet specific criteria, including having registered capital up to OMR 60,000, gross income not exceeding OMR 150,000, and an average of no more than 25 employees.

As of January 1, 2025, Oman has implemented a 15% domestic minimum top-up tax. This tax applies to multinational enterprise groups with consolidated revenues exceeding EUR 750 million. This measure aligns with the OECD’s Pillar Two global minimum tax framework.

Taxable income is determined by subtracting allowable deductions from gross income. Allowable deductions include ordinary business expenses such as employee salaries, rent, and operational costs, though some expenses are specifically disallowed. Businesses must maintain records according to International Financial Reporting Standards (IFRS). If a business incurs a loss, it can be carried forward against future profits for up to five years, while losses from a tax-exemption period can be carried forward indefinitely.

Value Added Tax (VAT)

Oman implemented a Value Added Tax (VAT) system in April 2021, applying a standard rate of 5% to most goods and services. The introduction of VAT was a step in broadening the government’s revenue base. Businesses with annual supplies exceeding a mandatory registration threshold of OMR 38,500 are required to register for VAT.

The VAT law categorizes supplies as standard-rated, zero-rated, or exempt. Standard-rated supplies are subject to the 5% tax. Zero-rated supplies are taxed at 0% and include certain basic foodstuffs, medicines, medical equipment, and exports, which allows businesses to reclaim VAT paid on their expenses.

Exempt supplies are outside the scope of VAT, and businesses making these supplies cannot register for or reclaim VAT. This category includes certain financial services, residential rentals, and local passenger transport. Businesses with turnover above a voluntary threshold of OMR 19,250 but below the mandatory threshold can choose to register for VAT.

Other Significant Taxes and Duties

Withholding Tax

A withholding tax (WHT) is imposed on certain payments from an Omani entity to a foreign company that does not have a permanent establishment in Oman. This tax is levied at a 10% rate and is deducted at the source of payment. The Omani-based payer is responsible for deducting and remitting the WHT to the Oman Tax Authority. Payments subject to WHT include:

• Royalties
• Management fees
• Consideration for research and development
• Fees for the use of or right to use computer software

Excise Tax

Oman levies an excise tax on specific goods considered harmful to health or the environment to discourage their consumption. Carbonated drinks with added sugar or sweeteners are taxed at a rate of 50%. Other goods are taxed at 100%, including:

• Tobacco products
• Alcohol
• Pork products
• Energy drinks

Customs Duties

Goods imported into Oman from outside the GCC are subject to customs duties, with a standard rate of 5% of the value of the goods. Certain essential items, such as basic food products and medicines, may be exempt from these duties. As of January 1, 2025, Oman has implemented the GCC Unified Tariff system, requiring a more detailed 12-digit Harmonized System (HS) code for import and export documentation.

Tax Administration and Compliance

All businesses operating in Oman must register with the Oman Tax Authority and obtain a tax card. This registration is a foundational step that must be completed shortly after the business is incorporated. The tax card contains the taxpayer identification number used in all filings with the authority.

For corporate income tax, businesses must file an annual income tax return within four months from the end of their financial year. For SMEs subject to the 3% tax rate, this return is due within three months. Any tax due must be paid by the filing deadline, and late payments are subject to a penalty of 1% per month.

VAT compliance requires businesses to file periodic returns, typically quarterly. These returns detail the total output VAT collected and input VAT paid, with the net amount payable to the authority. Tax returns and payments are managed through the Tax Authority’s online portal.