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6.5. Deduction of Cross-Border Payments and Non-Deductible Expenses

The following expense types are not deductible for Omani tax purposes:

  • Expenses incurred in the generation of tax-exempt income;
  • Capital expenditure;
  • Expenses allocated from the head office or other group companies are limited to 3% of gross income (5% in the case of banks and insurance companies, and 10% in case of high-tech industrial activities);
  • Expenses recoverable under insurance or indemnity contract;
  • Profits taxes;
  • Reserves and provisions (allowed for bank and insurance companies in certain cases);
  • Effective 1 January 2018, salary/ wages paid to owner or partners exceeding below limits:
    • more than OMR 3,500 per month (previously OMR 3,000) for companies carrying on professional activities; and
    • OMR 1,500 per month (previously OMR 1,000) for all other companies; and
  • Effective 1 January 2018, salary/ wages paid to owner or partners engaged in management exceeding below limits:
    • more than 35% (previously 30%) of taxable income for the year, before deduction of salary/ wages and losses carried forward for companies carrying on professional activities; and
    • 25% (previously 10%) for all other companies.

COVID-19 Emergency Measures

In response to the COVID-19 pandemic, Oman announced certain tax relief measures including allowing donations or contributions made by taxpayers for the purpose of dealing with the COVID-19 pandemic in Oman as tax deductible, subject to the burden of proof on the taxpayer.