SIGNIFICANT DEVELOPMENTS
1.The two latest amending enactments to Oman's income tax legislation, Sultani Decrees 68/2000 and 69/2000, were promulgated on August 12,2000. Their primary effect is to reduce the rates of taxes applicable to certain categories of taxpayers from the tax year 2001, which commenced on January
1,2001.
2.Prior to the latest amendments, the Omani tax
laws envisaged three separate regimes of charge for Oman-resident taxpayers. It was the extent of non-Omani participation in the taxpayer entity that largely determined the applicable regime. The latest amendments have simplified matters by eliminating one of the three regimes.
3.Another change introduced by the latest decrees is to extend the tax-free character of dividend income in a taxpayers hands to cover all dividends and not simply, as hitherto, those representing profits of a company that had itself paid Oman tax on the profits in question.
4.Further, the definition of an establishment has also been extended to include, in addition to those engaged in commercial and industrial activities, establishments engaged in professional activities such as the practice of medicine, engineering, advocacy, auditing and accounting, applying expertise, and other liberal professionals. Tax would be
applicable to such professional practices, with effect from tax year 2001.
TAXES ON CORPORATE INCOME
There are two categories of companies to which the following rates are applicable for the tax year 2001 and subsequent years.
1.Wholly owned Omani companies, companies in which foreign participation is 70% or less, investment funds established under the Capital Market Law, and public joint stock companies listed on the MSM: These companies are charged tax at the following rates.
Netincome Rates
%
First RO30,000 Nil
Over RO30,000 12
2.Companies with more than 70% foreign ownership. These companies are taxed
according to the table below. Tax is computed (1) by applying the percentage
relative to the bracket in which the taxable income falls or (2) by applying
the percentage of the bracket for taxable income immediately below that in
which the taxable income falls and adding the excess of taxable income to
the result. The lower amount is the tax payable.
Taxable income
Over Not over Rate
%
0 RO 5,000
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