Accounting and tax
- Oman companies are subject to corporate income tax at a flat rate of 12%. However, oil companies are taxed at a higher rate of 55%;
- Since 2017, a new category of company has been introduced i.e. the micro – business. Such an entity will only be subject to 3% corporate income tax;
- In Oman, capital gains are included in the corporate income and are hence, subject to the corporate income tax rate, as stated above;
- Our Clients, setting up branch office in Oman, will not be required to pay additional remittance tax over and above the corporate income tax;
- Since 2017, Oman authorities have introduced 10% withholding tax on i) dividend payments ii) interest payments and iii) payment for technical services to companies without a permanent establishment in the country;
- Additionally, there is a 10% withholding tax levied on royalty payments to foreign companies without PEs in Oman.
Tax filing matters
- All Omani companies must submit provisional tax return within 3 months from the end of the accounting year. Thereafter, tax to be paid within subsequent 3 months;
- Consolidated returns are not allowed under Oman law. All companies must file their individual corporate tax returns.
- There is no Value added tax (VAT) or sales tax in Oman. Additionally, there is no personal tax for our Client resident in Oman;
- There is a 3% municipality stamp tax on acquisition of commercial and residential property.
- Oman has Double Taxation Avoidance Agreements (DTAA) with 28 countries including: i) China ii) Canada iii) India iv) Netherlands v) Singapore and vi) UK;
- In accordance with The Sultani Decree No. 47 of 1981 each Omani entity must register for corporate tax at the Ministry of Finance in Oman. If required, Healy Consultants will be happy to assist you with tax and VAT registration for a one-time fee of US$750.
Legal and compliance
- The Commercial Code of Oman (“The Code”) requires every Oman company to appoint at least 1 director and 2 shareholders;
- In accordance with the Commercial Companies Law no. 4/1974, each Oman LLC must appoint at least 1 individual resident shareholder with 30% stake in the entity;
- There are no capital requirements for a wholly locally owned company. However, if foreigner ownership exists, the minimum capital required is at least US$400,000;
- Every Omani entity must appoint a manager, who shall enjoy full powers of administration, and his acts shall be binding to the company, provided it is supported with the capacity he enjoys.
- Non-Free Zone companies in Oman are required to hire at least 30% Omani nationals. Free Zone companies do not face such restrictions;
- Every Oman LLC with foreign employees must appoint a resident Public Relations Officer (PRO), who will i) liaise with Ministry of Manpower ii) apply for business visas and iii) process visa renewals and cancelations and iv) communicate with Government entities in Arabic;
- To recruit foreign employees, a company will i) apply for an expatriate quota and ii) provide evidence the skills and competencies required for the job are not available locally;
- Employer’s contribution for their employee’s social security fund is 11.5%. These are compulsory for all employees between 15 and 59 years;
- The governing labor law in Oman is 2003 Oman Labour Law. Our Clients will find them relatively easy to implement these as they the English system of labour laws in terms of employer responsibilities.
Miscellaneous legal matters
- Oman is a full member of i) World Intellectual Property Organization (WIPO) (1997) ii) World Trade Organization (WTO) (2000) iii) Paris Convention iv) Patent Cooperation Treaty (PCT) and v) Gulf Cooperation Council (1980);
- The legal framework of Oman is a dual acting system which comprises of mainly Islamic Shari’a and aspects of absolute hereditary monarchy. The cornerstone of the system is the “Basic Statue of Oman” (1996). The Shari’a courts hold precedence, especially in matters involving Muslims.