Oman legal and accounting and tax considerations in 2023
- All companies must register for corporation tax at the Ministry of Finance. If required, Healy Consultants will be happy to assist with registration for a one-time fee of US$750;
- Oman companies pay a flat 15% corporate income tax. Oil companies are taxed at 55%;
- Oman Free Zone companies are exempted from corporate income tax for ten years. They are also permitted to trade within the country without a local agent, but will be required to pay 5% import duties;
- Eligible small and medium sized enterprises pay only 3% corporate income tax if:
- The authorised share capital does not exceed OMR50,000 (~US$130,000);
- Gross income does not exceed OMR100,000 (~US$260,000) for any tax year;
- The number of employees during the tax year does not exceed 15;
- The company is not involved in air/sea transport, extraction of natural resources, banking, insurance, or financial services, public utility concessions.
- Capital gains are taxed at 15%, the same rate as ordinary income;
- Gains from sales of locally-listed shares are tax-exempt;
- A 10% withholding tax is levied on the below payments to foreign companies without a Permanent Establishment (PE) in Oman *:
- Dividend payments by Omani joint stock companies;
- Interest payments, with certain exceptions;
- Payment for technical services and
- Royalty payments.
(* Under Oman Tax Law, a PE is defined as a fixed place of business through which a business is wholly or partly carried out in Oman by a foreign person);
- Profit distributions from Omani limited liability companies to foreign partners are not subject to withholding tax;
- Oman is expected to introduce 5% VAT in early 2021. However, we think this implementation date may be pushed back as a result of COVID-19;
- Excise tax is levied at i) 100% for tobacco (including derivatives), pork products and energy drinks and ii) 50% for alcohol and carbonated drinks;
- There is a 3% municipality stamp tax on the 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;
- There are zero customs duties on GCC-manufactured goods;
- Most foreign imports are subject to a one-time External Common Custom Tariff of 5%.
- Omani Companies can choose their Financial Year End (FYE), its generally accepted to be 31st December;
- Within three months of the FYE, Omani companies must file a provisional tax return and pay an estimated tax amount;
- Within six months of the FYE, an annual income tax return must be filed, accompanied by audited financial statements, and any tax due must be paid at that time;
- Consolidated returns are not allowed under Oman law. All companies must file individual corporate tax returns;
- A foreign person with multiple PEs in Oman must file a tax return which reflects the total aggregate taxable income from all PEs.
- Oman has implemented Value Added Tax (VAT) with effect from 16 April 2021;
- Companies are required to register for VAT if the total value of annual supplies exceeds OMR 38,500;
- The standard rate of 5% VAT will apply on the goods and services supplied in Oman;
- Exempt supplies include i) financial services, ii) healthcare services, iii) educational services and iv) rental of properties;
- Zero rated supplies include exports, supplies within free zone and certain notified supplies (for example, the supply of medicines and medical equipment), and investment in gold/silver/platinum;
- VAT- registered companies are obligated to submit the return following the below schedule.
Quarter Deadline Q1- Jan to Mar 30 April Q2 – Apr to June 30 July Q3 – Jul to Sept 30 October Q4 – Oct to Dec 30 January
- For most activities, Oman Limited Liability Companies can be incorporated with a single foreign shareholder, who may be and individual or corporation;
- Commercial activities for which 100% foreign ownership is not permitted include: translation and photocopying services, tailoring, laundry, vehicle and automotive repairs, transportation, sale of drinking water, manpower and recruitment services, hairdressing and salon services, taxi operation, fishing, and rehabilitation homes for the elderly, disabled and orphans;
- The maximum number of shareholders for an LLC is 50;
- Although there is technically no minimum capital requirement for the new One Person LLC, it is advisable to reconfirm this with MoCI on a case-by-case basis;
- The minimum share capital requirement of OMR 150,000, approximately US$ 389,000 is no longer required.
- Every construction company in Oman must appoint a local Omani manager.
- The Oman company registration document needs to be renewed with the Oman Chamber of Commerce & Industry (OCCI) every 5 years;
- The OCCI membership certificate needs to be renewed annually, with 2-year renewal options also available. The renewal fee is contingent to the company grade;
- Other administrative items that need to be renewed annually include i) tenancy agreements, ii) municipality license and iii) post office box renewal.
- Every Oman LLC with foreign employees must appoint a local Public Relations Officer (PRO). The PRO will i) liaise with the Ministry of Manpower ii) apply for visas iii) process visa renewals and cancelations and iv) communicate with government entities in Arabic;
- Obtaining a visa for expatriate staff is challenging due to Oman’s government policy to prioritise the recruitment of Omani citizens (Omanisation) where possible. To hire a skilled expatriate, the company must provide evidence that the competencies are not available locally;
- There is a set percentage quota across six areas of the private sector companies to employ Omani locals:
- Banking and finance (60%);
- Industrial Sector (35%);
- Hotels and restaurants (30%);
- Wholesale and retail (20%) and;
- Contracting (15%).
- Companies in Oman Free Zones require just 10 to 15% Omanisation in the first 10 years of operation;
- Employers contribute 10.5% of monthly employee salaries for social security and 1% for industrial illness and injuries. Omani employees contribute 7% of their monthly salaries to the Social Security Fund. Expatriates do not pay social security contributions;
- Private sector employers must provide medical insurance to expatriate employees in Oman.