Corporate Income Tax
Oman imposes corporate income tax (CIT) at a standard rate of 15% on taxable profits of companies operating in Oman. The tax applies to:
- Omani-incorporated companies (on worldwide income in some cases)
- Branches of foreign companies (on Oman-source income)
- Joint ventures with significant Omani operations
Key CIT features:
- Tax year: calendar year (January to December)
- Filing deadline: April 30 following the tax year
- Provisional tax payment: required during the year (based on prior year liability)
- Withholding tax: 10% on dividends, interest, royalties, and service fees paid to non-residents (where not reduced by tax treaty)
- No surtax or surcharges on top of the base 15% rate
Small business exemption: Companies with gross revenue below OMR 30,000 per annum may benefit from simplified tax treatment or exemption — a threshold primarily relevant to small Omani-owned businesses.
Oil and gas sector: Upstream oil and gas companies (PDO, IOC operators) are taxed under their concession agreement terms, which typically specify a higher effective tax rate (50-55% in many cases) as part of the production sharing or royalty structure.
Value Added Tax (VAT)
Oman implemented VAT on 16 April 2021 at a rate of 5% — the final GCC state to do so, after Saudi Arabia (2018 at 5%, raised to 15% in 2020), UAE (2018 at 5%), Bahrain (2019 at 5%, raised to 10% in 2022), and Kuwait/Qatar (not yet implemented as of 2026).
VAT scope: Standard-rated at 5% on most goods and services supplied in Oman.
Zero-rated supplies (0% VAT): Exports of goods, international transportation, selected financial services, health and education (qualifying supplies), medicines and medical equipment.
Exempt supplies: Residential rent, bare land transactions, local transport services, certain financial services.
VAT registration threshold: Businesses with taxable supplies exceeding OMR 38,500 per annum must register for VAT. Voluntary registration available above OMR 19,250.
VAT revenue contribution: VAT now generates approximately 1-1.5% of GDP annually — a significant contribution to Vision 2040’s non-oil revenue diversification target.
Excise Tax
Excise tax was introduced prior to VAT, applying to:
- Tobacco products: 100%
- Alcoholic beverages: 100%
- Energy drinks: 100%
- Pork products: 100%
- Sweetened drinks: 50%
Excise tax applies at import or manufacture stage and is embedded in retail prices.
Customs Duties
Oman applies customs duties as a GCC member state:
- Standard GCC customs tariff: 5% ad valorem on most goods
- Exemptions: Capital equipment for industrial projects (often 0% with pre-approval), GCC-origin goods (0% under GCC customs union)
- Free zone exemptions: Goods imported into OPAZ-regulated free zones are exempt from customs duties; duty is charged on entry into Oman’s domestic market
US-Oman FTA (2009): The bilateral free trade agreement with the United States provides preferential tariff rates on qualifying goods from the US — a significant benefit for US-origin industrial and consumer goods.
Personal Taxation
No personal income tax. Individuals — both Omani nationals and expatriates — pay no income tax on employment income, investment income, or capital gains in Oman. This is a significant competitiveness advantage for attracting and retaining talent.
Social insurance contributions are payable on Omani national employees’ salaries (employer and employee shares), but these do not apply to expatriate workers.
Free Zone Tax Benefits
Investors in OPAZ-regulated economic zones benefit from substantial tax incentives:
- Corporate income tax exemption: 25-30 years from commencement of operations (specific periods vary by zone and investment type)
- Customs duty exemption: On inputs imported for use in zone operations
- No withholding tax on dividends, interest, and royalties paid from zone operations during the exemption period
These incentives are significant for large capital projects — the absence of tax for 25+ years substantially improves investment IRRs, compensating for Oman’s slightly higher operating costs relative to some competitor locations.
International Tax Treaties
Oman has an extensive network of double tax avoidance agreements (DTAAs):
- 37+ bilateral DTAAs covering major investment partner countries
- Key treaties: UK, France, Germany, Netherlands, India, China, Japan, South Korea, US (limited)
- Treaties typically reduce withholding tax rates to 5-10% on dividends and interest
The DTAA network is actively expanded as Oman seeks to position itself as a regional holding company and investment platform location.
Global Minimum Tax (Pillar Two)
The OECD/G20 Pillar Two global minimum tax of 15% on large multinational enterprises (those with annual revenues exceeding €750 million) is being implemented globally from 2024-2025. Oman is developing its domestic legislation to implement Pillar Two — which will effectively cap the benefit of free zone tax exemptions for qualifying MNE groups, though smaller investments and domestic companies are unaffected.
The Pillar Two implementation is expected to reduce the tax competitiveness advantage of free zones for very large multinationals, while maintaining benefits for mid-market investors below the €750mn revenue threshold.