Taxes and general charges are based on justice and the development of the national economy. Imposition, amendment, and abolition of public taxes, shall only be by virtue of a law and no one is exempted from paying all taxes or part thereof except in the circumstances prescribed in the law. It is not permissible to introduce a new tax, fee or any right of any type whatsoever with retrospective effect.
Oman is like many other Gulf States where a little taxation is applied to the residents. Only those individuals who have the relevant visa are considered to have the residency status and are allowed to work in the nation, so the question of residency with regard to taxation does not arise.
How Does Taxation in Oman Work?
Oman has a number of tax treaties in place with other neighboring countries. The revenue of taxation in Oman mostly comes from the corporate tax and if you are running a business in the country of Oman, you are subject to taxation regardless of your country of origin. Companies are subject to all the taxes that do not apply to individuals such as capital gains, income on dividends etc. Let us go through the various taxes Oman is subject to.
The Oman tax comprises these 3 elements:
- Withholding Tax
- Customs Duty
- Corporate Tax
1. Withholding Tax
Oman withholding tax is applied 10% at source for payments of the following services to the foreign persons that do not have income attributed to a permanent establishment in Oman. They are:
- Management fees
- Consideration for research and development
- Consideration for the use of or right to use a computer software
- Dividend on shares or interests
Any taxpayer, Ministry, organization, public institution or other legal entity and administrative service must pay the amount after deducting the standard 10% withholding tax in Oman and shall submit to the Secretariat General within a period not exceeding fourteen days from the end of the month in which the payment or the account was made, on the form prepared for this purpose.
2. Customs Duty
Oman has been the part of GCC union since its establishment in 2003 with an aim to remove the custom and trade barriers between the GCC countries. The GCC member states apply a Common Customs Law and a Unified Customs Tariff with a standard customs duty rate of 5% of goods cost, insurance and freight value, with a few exceptions, such as tobacco and alcoholic goods being subject to a customs duty rate of 100%. This law does not levy the export customs duty. Also, the goods imported into Oman’s free zones and special economic zone may be exempt from the customs duty which means it does not have any Oman tax rate.
3. Corporate Tax
The corporate income tax is charged on all sources of income of any type of business entities which earn and realize in Oman. The Oman companies are also liable to tax on their overseas income. Oman’s tax law seeks to tax the worldwide income of Oman entities and the Oman-source income of branches and other permanent establishments. The corporate tax rates are as follows:
- First OMR 30,000 of taxable income: 0%
- Above OMR 30,000: 12%
The tax rate for companies engaged in petroleum exploration is 55% on income derived from the sale of petroleum products.
VAT in Oman
At present, there is no Value Added Tax in Oman. However, the GCC Finance Ministers have approved in principle a VAT treaty, which will constitute the common framework for the introduction of VAT in the GCC. The treaty will form the basis for the issuance of national VAT legislation by each GCC State. There will be a standard fully-fledged VAT system that will apply at 5% across the GCC. However, a legislation has yet to be published setting out the specific details of the VAT regime in Oman including the exact introduction date.
Our Tax Services in Oman
We at Business Setup Worldwide utilize our knowledge to provide companies with a range of effective solution. Our services in Oman include:
- Preparing the periodical tax filing statements and forms
- Submitting the same to the appropriate authorities
- Managing payments of the tax liabilities on behalf of the client
- Handling basic queries, notices or assessment from the tax office
If you are looking to for tax-related solutions for your company, we at Business Setup Worldwide are at your service. Our advisors in Oman are well-versed with the taxation framework and will promptly file all the taxes before the due date. Contact us today, even if it’s for a friendly advice.