Definition
Oman tax system has evolved significantly in recent years as the government pursues fiscal diversification. The principal taxes include corporate income tax (CIT), value added tax (VAT), withholding tax on certain payments to non-residents, and excise tax on specific goods. Notably, Oman does not impose personal income tax on individuals. The Oman Tax Authority (OTA), established in 2020, is the central body responsible for tax administration, compliance, and policy implementation.
Context in Oman
Corporate income tax is levied at a flat rate of 15 percent on taxable profits of all entities operating in Oman, whether Omani or foreign-owned. Small enterprises with annual revenue below OMR 100,000 benefit from a reduced rate of three percent. Tax exemptions are available for companies operating in free zones (typically 30 years), and various sector-specific incentives exist. VAT at five percent was introduced in April 2021. Withholding tax at ten percent applies to royalties, management fees, and certain payments made to non-resident entities without a permanent establishment. Excise tax, introduced in 2019, applies to tobacco, energy drinks, alcohol, pork, and sugary drinks at rates between 50 and 100 percent. Transfer pricing rules aligned with OECD guidelines were introduced in 2020.
Key Data Points
| Metric | Value |
|---|---|
| Corporate income tax rate | 15 % |
| Small enterprise rate | 3 % (revenue below OMR 100k) |
| VAT rate | 5 % |
| Personal income tax | None |
| Withholding tax on non-residents | 10 % |
Vision 2040 Connection
Tax reform is fundamental to Vision 2040 fiscal sustainability goals. The strategy calls for gradually broadening the tax base while maintaining Oman competitiveness as an investment destination. Non-oil tax revenue is expected to grow significantly as a share of total government income, reducing vulnerability to oil price fluctuations.
Further Reading
- [[What is VAT in Oman]]
- [[Oman Excise Tax]]
- [[What is Fiscal Sustainability]]