Overview
Tax reform is a cornerstone of Oman’s fiscal diversification strategy. Historically, the Sultanate relied almost exclusively on oil and gas revenues to fund public expenditure, with minimal taxation of businesses or individuals. The introduction of value-added tax in April 2021 and a reformed corporate income tax regime in 2023 marked a paradigm shift, creating sustainable non-oil revenue streams that reduce vulnerability to commodity-price cycles and strengthen the government’s fiscal position.
Key Points
VAT is levied at a standard rate of five percent, with exemptions and zero-rating for essential goods including basic foodstuffs, healthcare, and education. The corporate income tax framework applies a flat rate to taxable profits above a defined threshold, with incentives for small and medium enterprises and strategic sectors. Transfer pricing regulations aligned with OECD guidelines have been introduced to prevent base erosion and profit shifting. Excise duties on tobacco, energy drinks, and sugary beverages complement the broader tax architecture.
Current Status
VAT collection has exceeded initial forecasts, demonstrating strong compliance and effective administration by the Oman Tax Authority. The corporate tax regime is in its early implementation phase, with taxpayer education and digital filing systems being rolled out. International observers have praised the measured pace of reform, which balances revenue needs with business-environment competitiveness. Discussions around personal income tax remain exploratory, with no formal timeline announced.
Vision 2040 Context
Vision 2040 targets a modern, diversified revenue base that sustains high-quality public services without depending on oil prices. Tax reform is fundamental to this ambition, creating a predictable fiscal framework that supports long-term investment planning. By aligning with international standards, Oman also strengthens its position in global trade and investment networks, attracting multinational corporations seeking a transparent, well-regulated business environment.