Friday, 21 April 2017

Oman makes wide-ranging changes to tax law

Amendments to Oman’s income tax law were announced in a royal decree issued on 19 February 2017 and published in the official gazette on 26 February 2017. Among other changes, the amendments increase the standard corporate income tax rate, introduce a lower tax rate for qualifying small companies, expand the types of payments subject to withholding tax and impose stricter noncompliance penalties. Certain changes are effective from the date the decree was published, others are effective for tax years commencing on or after 1 January 2017 and the effective dates for
some changes will be announced when further guidelines are issued.

Corporate tax rates
The standard corporate tax rate is increased to 15% (from 12%) for Omani companies and permanent establishments (PEs) of foreign companies, and the standard taxable income exemption threshold for companies of OMR 30,000 is removed, which will bring more taxpayers within the tax net. At the same time, however, a new, lower tax rate of 3% is introduced for “small taxpayers” that fulfill the following conditions for the relevant tax year:

  • The taxpayer’s registered capital at the start of the tax year does not exceed OMR 50,000;
  • The taxpayer’s average number of employees does not exceed 15; and
  • The taxpayer’s gross income does not exceed OMR 100,000.

To qualify for the 3% rate, the small taxpayer may not be involved in certain business activities, such as banking and finance, insurance, public utilities concessions, air and sea transport, extraction of natural resources or other business activities identified by the Council of Ministers. In addition to the lower rate, small taxpayers are allowed to file a simplified, hard copy tax declaration. The tax authorities may use anti-avoidance provisions to reallocate income among companies if they suspect that a taxpayer has planned its activities to split larger businesses into smaller units that fulfill the above conditions in order to benefit from the lower small-taxpayer rate.
The corporate tax rate changes are effective for tax years beginning on or after 1 January 2017.

Source & more info: Deloitte