Accounting and tax
- Oman companies are taxed at a flat rate of 12% except for oil companies which are taxed at 55%;
- Likewise, capital gains are taxed at a flat rate of 12%;
- There are no withholding taxes on i) dividends and ii) interest payments. However, there is a 10% withholding tax levied on royalties to foreign companies without permanent establishments in Oman;
- Employer’s contribution for their employee’s social security fund is 11.5%;
- There is a 3% municipality stamp tax on acquisition of commercial and residential property.
Miscellaneous tax matters
- Oman companies are required to submit provisional declaration of tax within three months from the end of the accounting year. Taxes must be paid within three months from the date of filing;
- An Oman LLC can enjoy tax incentives if incorporated within in one of the two Omani free trade zones (FTZ). If registered in a FTZ, an export-oriented company is indefinitely exempted from all local, state and federal taxes;
- Oman has Double Taxation Avoidance Agreements (DTAA) with 28 countries including: i) China ii) Canada iii) India iv) Netherlands v) Singapore vi) UK and a free trade agreement with the USA.
Healy Consultants’ services
- 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;
- Healy Consultants Compliance Department assists our Clients to efficiently and completely discharge the annual accounting and auditing obligations of their Omani company through the following: i) documenting and implementing accounting procedures ii) implementing financial accounting software and source for Oman accountants and iii) preparing forecasts, budgets and sensitivity analysis to better manage financial obligations and ease the process of reporting to the Oman accounting authorities.
Legal and compliance
- The Commercial Code of Oman (“The Code”) was established in 1974 and covers establishment, structure and governance of private business in Oman;
- According to the Commercial Code, an Oman company must have at least one director and two shareholders;
- In accordance with the The Commercial Companies Law no. 4/1974, each Oman LLC must have at least one individual shareholder ordinarily resident in Oman with a minimum shareholding of 30%;
- The minimum capital of US$400,000 is required if there is foreign ownership in the company;
- Each Oman entity must appoint a manager. The manager is appointed by the memorandum of association (MOA) or by a separate management contract. Unless otherwise stated in the MOA, the company manager shall enjoy full powers of administration, and his acts shall be binding to the company, provided it is supported with the capacity he enjoys.
- Companies located outside the free zones are required to hire at least 30% Omani nationals;
- It is compulsory for every Oman LLC with foreign employees to appoint a resident Public Relations Officer (PRO). Monthly responsibilities of the PRO include i) liaising with Ministry of Manpower; ii) applying for business visas and iii) processing visa renewals and cancelations iv) communicating with Government entities in Arabic;
- Recruitment of foreign labour requires the company to apply for an expatriate quota. Applications require the company to give evidence that the skills and competencies required for the job are in short supply or not available locally;
- When employing local or foreign workers, employers must make sure to stay compliant with the 2003 Oman Labour Law, the main set of laws governing labour in Oman. The current labour laws resemble 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.