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8.1.1. Corporate Income Tax

Effective for tax years beginning on or after  1 January 2017, resident corporate entities are subject to tax at the standard rate of 15%. Prior to that date, Oman applied graduated tax rates, whereby the first OMR 30,000 of taxable income was tax-exempt, and any surplus income  was subject to tax at the rate of 12%.

On 9 March 2021, Oman introduced an economic stimulus plan as part of the ‘Oman Vision 2040’, which aims at the economic recovery of the country. The measures include a deduction of 1% of the tax due for 2021, subject to a cap of OMR 10,000 for all taxpayers that file the tax return for the tax year 2021 and pay taxes within the prescribed due dates.

Small and Medium Enterprises (SME)

Effective for tax years  beginning on or after 1 January 2017, a 3% flat tax rate applies to limited liability companies and partnerships that are SMEs meeting the following conditions:

  • Registered capital does not exceed OMR 50,000;
  • Gross income does not exceed OMR 100,000;
  • Average number of employees during the tax year does not exceed 15; and
  • The taxpayer is not engaged in the business of air/sea transport, extraction of natural resources, banking, insurance or financial services, public utility concessions, or other specified activities.

In March 2021, Oman introduced an economic stimulus plan as part of the Oman Vision 2040, which provided for a reduced tax rate of 12% instead of 15% for SMEs registered during the 2020 and 2021 tax years. An enterprise may be classified as a SME based on the classification set by the Public Authority for Small and Medium Enterprises Development and their counterparts that are not registered with the Public Authority but are registered with the Ministry of Commerce, Industry and Investment Promotion for the tax years 2020 and 2021. (see Sec. 10.2.).

Petroleum, Oil and Gas Industry

Income from oil sales (exploration and production) is subject to an increased tax rate of 55%. Effective 1 January 2016, income from liquid natural gas sales would also be subject to such increased tax rate. Further, companies engaged in related oil and gas activities and mining activities, are subject to tax at a special rate of 35%.