Oman’s income tax law | KPMG | OM

Oman’s income tax law

Oman’s income tax law

Royal Decree 9/2017 issued on 19 February 2017 and published in the Official Gazette on 26 February 2017 makes sweeping changes to Oman’s income tax law.

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The major changes include:

  • The tax rate has been increased from 12 percent to 15 percent for financial years beginning 1 January 2017.
  • A three percent tax has been introduced for micro businesses.
  • The tax-free threshold of OMR 30,000 has been removed.
  • Dividends on shares and any interest paid or credited to any foreign person from 27 February 2017 are now subject to withholding tax at 10 percent.
  • Fees for services included in the definition of income from 1 January 2018. Such fees are also now included in the scope of withholding tax.
  • Ministries and other government bodies are now expected to withhold and pay tax.
  • Tax exemptions for mining, export of locally manufactured goods, hotels and tourist villages, agriculture, animal produce, fishing, education and medical care have been removed.
  • Exemptions for manufacturing companies have been limited to five years
  • All tax payers must get a tax card and use it on all contracts, invoices and correspondence
  • The new tax regime will depend on self-assessment
  • Penalties and punishments – including the imprisonment of the principal officer – have been strengthened

The amendments should enhance tax revenues but will increase the cost of doing business in Oman. Taxes on dividends and interest will reduce the return on investments and could increase the cost of borrowing.

© 2017 KPMG Lower Gulf Limited, registered in the UAE and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the United Arab Emirates. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

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