Thinking Beyond Borders
The existence of a representative of a foreign entity in relation to a business or contract in Oman may trigger the taxable presence of the entity in Oman for corporate income tax purposes.
There are currently no personal income tax in Oman.
Oman operates an income tax regime that applies to companies and a wide range of other commercial activities, including general partnerships and limited partnerships, joint venture arrangements and permanent establishments of foreign entities. An individual is subject to income tax to the extent that they carry on commercial, industrial or professional activities as a ‘proprietorship’.
There may be corporate tax implications where representative/employee of a foreign entity is present in Oman for 90 or more days in a twelve month period.
There is no personal tax in Oman. However, there is corporate tax applicable on taxable income realized in Oman by foreign bodies corporate.
The Income Tax Law applies a flat 12 percent rate of income tax to all domestic and foreign companies and commercial operations (the first 30,000 Omani Rials – OMR – of taxable income is tax-exempt). This rate shall apply to an individual who earns taxable income from carrying on commercial, industrial or professional activities as a ‘proprietorship’.
As there is no personal income tax in Oman, personal income tax rates are not applicable.
Social security contributions are applicable in Oman only for Omani nationals. If Omani nationals are employed, then both the employer and the employee will be required to make social security contributions to the Public Authority for Social Insurance (PASI). A payment of 11.5 percent by the employer (including payment of 1% to insurance against work related injuries and illness) and 7 percent by the employee are due for Omani nationals to the PASI.
Employer and employee contributions are calculated on the aggregate of basic salary and allowances paid in cash and in-kind. The gross salary to be included in the calculation is limited to a monthly gross salary amount of 3,000 Omani Rials. Employers will need to assign a monetary value to the allowances paid in kind.
The employer of an expatriate or an expatriate employee are not required to make any social security contributions in the Oman.
There are no compliance obligations for employees in Oman in the absence of personal tax.
There are no compliance obligations for employers in Oman in respect of personal tax.
Any foreign national intending to visit Oman must obtain a visa. Such visa specifies the period for which an individual is allowed to stay in Oman. A visitor’s entry visa does not permit a foreign national to work in Oman. Visit visas can be obtained on the port of entry by citizens of some countries. Citizens of other countries can obtain visit visas by applying for the same at Oman’s diplomatic missions in their respective country. Visit visas are usually single-entry visas and entitle a person to stay in Oman for a period of 3 months.
Foreign nationals coming to Oman for the purpose of employment must obtain an employment visa (prior to departure from home country) sponsored by the company that will act as their employer. For certain nationalities, the foreign nationals seeking employment have to undergo medical tests and obtain a medical report from their home country prior to employment visas being issued.
Oman has entered into double taxation treaties (comprehensive and limited) with more than 30 countries to prevent double taxation and allow cooperation between Oman and overseas tax authorities in enforcing their respective tax laws.
Oman’s network of double tax treaties (either signed, to be ratified, or in the process of being ratified) includes Algeria, Belarus, Belgium, Brunei, Canada, China (People's Rep.), Croatia, Egypt, France, Germany, India, Iran, Italy, Japan, Korea (Rep.), Lebanon, Mauritius, Moldova, Morocco, Pakistan, Portugal, Netherlands, Russia, Spain, Syria, Sudan, Seychelles, Singapore, South Africa, Switzerland, Thailand, Tunisia, Turkey, United Kingdom, Uzbekistan, Vietnam and Yemen.
There is a likelihood that there could be Permanent Establishment exposure, for overseas company in Oman (due to presence of secondees in Oman) and this may need a separate examination from corporate tax perspective.
‘Permanent establishment’ (PE) has been re-defined to include foreign companies providing services in Oman, where the presence of the company’s employees in Oman (or other individuals under the company’s control) exceeds 90 days in any 12-month period.
There are currently no indirect taxes applicable in Oman, other than customs duty. A majority of the goods imported into the Gulf Cooperation Council (GCC) states which includes Oman, attract a uniform customs duty of 5 percent, and this is levied at the point of first entry into the GCC. Further movements of goods within the GCC are free of customs duties.
Please note that the GCC countries are actively considering the introduction of a value-added tax (VAT) regime in the near future.
Income tax law includes related party provisions (not specifically referred to as ‘transfer pricing’ provisions) under which the value of related party transaction can be ignored and taxable income can be calculated, instead, on an arm’s length basis.
Although there are no explicit transfer pricing rules in Oman, however, in practice, the Oman Tax Authority is closely scrutinizing all related party transactions at the time of tax assessment and requesting companies to provide documentary support that the charges with related parties were on a ‘third party arm’s length’ basis. Where a company is not able to provide such documentary support, the Oman Tax Authority may reduce expenses as it deems appropriate which can give rise to a significant additional tax cost to the Company where the adjustments are large.
Oman has laws relating to e-Commerce which contain provisions relevant to data protection. Oman’s Electronic Transactions Law (Royal Decree 69/2008) is based largely on the UN Model Laws relating to e-commerce and electronic signatures. But the law as enacted goes beyond these to include specific provisions relating to data protection.
Currently, there are no exchange controls in force in Oman.
Non-deductible costs for assignees are not applicable as there is no personal tax in Oman.
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