Taxes are one of the primary sources of revenue for the government. This tax is applied to a company regardless of the nationality or the residential status of the owner. The government of Oman is trying to focus more on revenue from non-oil sources, and Corporate tax is one of the significant sources of income in taxation. Concentrating on the well-being and the development of the country, it has brought on some changes in the Oman Tax Law which give more emphasis on increasing the revenue from taxes, improving the tax administration and helping the businesses to grow more.
If you are starting a company in Oman then the knowledge of the Oman Tax Law, especially the Corporate Tax law and Withholding Taxes would be very crucial for you. Let’s see how can we file taxes under the Omani tax law.
Filing of Corporate Taxes
According to the Omani law, all the taxpayers are required to submit two returns for the relevant tax year to the General Secretariat for Taxes on the specified forms:
The first is the Provisional Return which needs to be submitted within the ending three months of the tax year. In this, the establishment mentions the taxable income for an accounting year and also the tax value which is self-assessed by the establishment. The necessary payments are to be made at the office of the Secretariat General for Taxation or via any bank conducting its operations in the sultanate. The taxes are based on their Activity detail returns, Provisional returns, Annual return and the Final account of the company.
This form should be submitted within the last six months of the of the tax year. In this form, the establishment states its yearly income and the tax due according to the self-assessment. A licensed auditor would accompany the audited documents. There are two types of annual returns for establishments:
- Institutions with a maximum capital amount of OMR20,000 for which no audited accounts are expected
- Institutions with a capital amount of more than OMR20,000 for which the final audited accounts are required to be attached with the return
The necessary payments are to be made at the office of the Secretariat General for Taxation or via any bank conducting its operations in the sultanate, and all the taxes are based on their Activity detail returns, Provisional returns, Annual return and the final account of the company.
In case you fail to submit any of the above returns within their respective time limits, the law permits the Secretary-General of Taxation to enforce a fine up to OMR2000. A penalty may also be imposed if the real income is not revealed in the final return.
Changes to the Corporate Tax
On 26 February 2017, Royal Decree 9/2017 relating to corporate income tax was published in the official gazette. It introduces various changes to the Income Tax Law of 2010 which would apply to all the companies and different other entities that can be subjected to Corporate Tax.
The fundamental changes are as below:
- There is a 3% increase in the tax rate (from 21% to 15%)
- The threshold for exemption which was initially at OMR30,000 which is approximately $78,000 has been removed
- The payments of any interest or dividends made to non-residents are now subject to Withholding Tax (WHT)
- Interest and dividend payments made to non-residents are subject to withholding tax (WHT)
- Any payments for which are availed by the non-residents are subjected to 1-% Withholding Tax
- The exemption of the Withholding Tax on any payments made by the ministries and other government institutions have now been eliminated, and the relevant institutions are now obligated the deduct the WHT tax on the payments made
- The tax exemptions have now been limited only to the manufacturing sector for a period of five years which can’t be renewed
- With the aim of increasing accuracy and the precision of the tax filings, the self-assessment basis of tax filing has been introduced
- In line with the banking income streams, provisions for the taxation of the Islamic financial transactions were included.
- Changes such as the provisions for the WHT taxes would be implemented with immediate effect from the date the decree was published in the Government Gazette.
These were some of the essential changes which an entrepreneur needs to know before he or she could file taxes for their company. Filing of taxes is a significant activity which would greatly affect the workings of the business. A small mistake while filing your taxes can cause huge problems and can hinder in the growth of the business and can even lead to the decline of the business. Thus it is suggested that you let the professionals do the tax filing for your business as it would free your time which you can devote to the growth of the business.
We at Business Setup Worldwide provide tax services in Oman, along with various other services relating to Visa, Corporate Secretary, which can help you in growing your business. For any help or clarification of any doubt – contact us.
Who is responsible for applying relevant taxation laws?
The Oman Tax Authority is responsible for applying the relevant taxation laws in Oman.
How many shareholders does an LLC require in Oman?
An LLC requires at least two shareholders
Can a foreign company conduct business in Oman through a foreign company branch?
Yes, a foreign company can conduct business in Oman through a foreign company branch.
What are the legal entities subject to corporate tax in Oman?
The following entities are subject to corporate tax:
Companies and enterprises established in Oman
Foreign entities are undertaking business in Oman