The document summarizes key changes to Oman's taxation laws effective in 2017. The main changes include an increase in corporate income tax rate from 12% to 15%, elimination of the tax exempt threshold of 30,000 Omani Rials, and expansion of withholding tax provisions to apply to dividend, interest, and service payments to foreign entities in addition to existing categories. A lower 3% tax rate is introduced for small businesses meeting certain criteria. Tax cards will also be implemented for all taxpayers.

1. Key Changes to Oman Taxation
February 2017
Compiled by Jose Chacko FCA | Feb 2017 | josechacko@khazaen.om

2. Changes in Corporate Income Tax - Key Points
• An increase in the basic income tax rate from 12% to 15%
• A lower tax rate of 3% applicable to small tax payers on fulfillment of
certain conditions
• First “R.O.30,000” taxable income as exempt threshold limit is scrapped.
• Introduction of TAX CARDS for all taxpayers.
• Introduction of electronic tax return filing
• Effective date: 2017 tax year
• Changes in Tax Holiday provisions.
• Changes in Withholding Tax provisions(WHT)
• Enhanced penalty provisions, including increased criminal penalties
• Further points to consider
Compiled by Jose Chacko FCA | Feb 2017 | josechacko@khazaen.om

3. An increase in the basic income tax rate from 12% to 15%
• Effective from any financial years beginning on or after January 2017,
the general tax rate has been increased from 12% to 15% on taxable
income.
• While calculating taxable income, exempted threshold limit of
R.O.30,000 is eliminated.
Compiled by Jose Chacko FCA | Feb 2017 | josechacko@khazaen.om

4. A Lower tax rate of 3% applicable on fulfillment of certain
conditions.
Conditions:-
1. The assesse must be an Omani sole proprietorship/partnership or limited
liability company with a registered capital of not more than OMR 50,000* at
the beginning of the tax year.
2. The gross income shall not exceed OMR.100,000
3. The average number of employees during the year shall not exceed 15.
4. The assesse shall not carry out business in air and sea transport, banking
insurance, mining and public utility concessions.
Even though this condition is not explicitly limited to fully omani owned
companies, the capital requirement automatically excludes foreign
investment companies, which under the Foreign Capital Investment Law
must have a minimum capital of OMR.150,000/-. Exceptions to this rule
may extend to fully owned GCC companies, U.S. Companies established
under the Free Trade Agreement, and companies registered at KOM and
Engineering Consultancy companies, as these may all be registered with
a minimum share capital of OMR.20,000/-
Compiled by Jose Chacko FCA | Feb 2017 | josechacko@khazaen.om

5. Introduction of TAX CARDS * for all taxpayers
1. All existing taxpayers will be issued with tax cards and new taxpayers must
apply for a tax card at the time of Commercial Registration.
2. The tax card number must appear on all contracts, invoices and tax authority
correspondence.
3. Government entities must obtain a copy of the tax card before dealing with a
taxpayer.
4. Failure to comply with tax card provisions may result in a fine of up to
OMR.5000.
Compiled by Jose Chacko FCA | Feb 2017 | josechacko@khazaen.om
* Ministry of Finance is to determine the effective date of provisions related to
the Tax Card

6. Effective date: 2017 tax year
• Companies are subject to the new tax rules beginning in their
respective 2017 tax year.
Eg: Company adopting a financial year from July 2017 to June 2018,
will be subject to new tax rate from July 2017 tax year.
Compiled by Jose Chacko FCA | Feb 2017 | josechacko@khazaen.om

7. Changes in Tax Holiday provisions
Existing Amendment
Holiday period 5 years renewable
indefinitely
Total 5 years initially and
not renewable
Applicability • Industrial
• Mining
• Tourism
• agriculture and fishing
• Medical care
• Education
Applicable only to
industrial(Manufacturing)
companies
Effective date 27th February 2017
Already granted
permissions
Will continue until expiry of present holiday.
Compiled by Jose Chacko FCA | Feb 2017 | josechacko@khazaen.om

8. Changes in Withholding Tax provisions(WHT)**
Existing Amendment
Applicability Specific services by foreign
companies without a permanent
establishment(PE) in Oman
No changes in the applicability
but PE definition is refined to
include PE where the activity
carries on for more than 90 days.
Applicable
services
• Royalty payments
• Management fee
• Consideration to use or right to
use computer software
• Consideration for research and
development
Extended to
• Dividend payments
• Interest and
• Payment for services
In addition to previous list.
Effective date 27th February 2017
Withholding
tax rate and
due date
10% to be deducted from the gross amount. Should be remitted to the
tax authorities within 14 days from the end of the month in which the
payment to the foreign person is made.
* * WHT provisions need to be read in conjunction with Double Tax Treaty
between Oman and the country of origin of the foreign service provider. Although
Government entities like Ministries, Public Authorities etc do not fall under
“taxpayer”, law specifically provides that WHT will be applicable for the
payments made by Government entities.
Compiled by Jose Chacko FCA | Feb 2017 | josechacko@khazaen.om

9. Further points to consider
1. Potential impact of amendment to withholding tax on cross boarder
financing?
2. Burden on extra costs of existing contracts and payment obligations?
3. The potential impact on the withdrawal of tax holiday to companies?
4. Withholding tax provisions applicable to exempted companies like Free
Zone Companies
Compiled by Jose Chacko FCA | Feb 2017 | josechacko@khazaen.om