MAJOR DEVELOPMENTS
Royal Decree 87/96 has amended some of the provisions of the Law of Income Tax on Companies issued under Royal Decree 47/81. The amendments made by the Royal Decree include:
q Reducing tax rates on companies with foreign participation of 90% or less;
q Allowing companies to indefinitely carry forward losses incurred during the tax-exemption period;
q Extending tax exemption to companies carrying on activities in certain fields;
q Specifying additional sources of taxable income (royalties, rents from rental equipment, machinery, and appliances, management fees, and amounts in return for technical know-how and research and
development;
q Introducing withholding tax on certain payments made to foreign
companies with no permanent establishment in Oman;
q Increasing the deduction of gross income allowed for
contributions made to entities specified by the Council of Financial
Affairs and Energy Resources to 5% from 1%.
Royal Decree 89/96 has amended some of the provisions of the Law of
Profit Tax on Commercial and Industrial Establishments issued under
Royal Decree 77/89. The principal changes include treating the
shareholdings in public joint stock companies of branches of foreign
companies, foreign companies, and mixed Omani companies as Omani
participation for the purpose of applicable tax rates.
Royal Decree 90/96 amended certain provisions of the Law of
Foreign Capital Investment (FCIL) promulgated by Sultani Decree 102/94.
The primary changes include providing a tax exemption for companies
licensed under FCIL to carry out activities in certain fields and
providing FCIL projects with exemption from customs duties on the
import of tools and equipment necessary for the construction of the
projects.
INCOME TAXES ON CORPORATIONS
1. Rates
Income tax on taxable income that has arisen or is deemed to have
arisen in the Sultanate of Oman (Oman) is payable by all corporations,
whether or not registered in Oman. Corporations include companies,
partnerships, sole traders, business entities, joint ventures, and
branches of foreign corporations. The tax rates for corporations are as
follows.
q Wholly owned Omani businesses. Companies and trading and
industrial establishments whose capital is wholly owned by Omani
nationals are subject to the following rates:
Taxable Income Rate
First RO 30,000 0%
Next 170,000 5
Excess over 200,000 7.5
General joint stock companies (SAOG) are treated as wholly Omani owned
companies and enjoy the above tax rates provided the Omani
participation is at least 51% and 40% of the share capital is offered
for public subscription. For this purpose, participation by branches of
foreign companies is treated as Omani participation.
q Omani companies in which the foreign participation is 90% or
less of its share capital. The tax rates are:
Taxable Income Rate
First RO 30,000 0%
Next 100,000 15
Next 150,000 20
Excess over 280,000 25
q Foreign-owned businesses and Omani companies with foreign
participation in excess of 90% of its share capital. The tax rates for
foreign-owned businesses carrying on business in Oman without Omani
capital contribution and for Omani companies with foreign participation
in excess of 90% of its share capital are:
Taxable Income
Over Not Over Rate
RO 0 RO 5,000 0%
5,000 18,000 5
18,000 35,000 10
35,000 55,000 15
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