Oman has not adopted a law on personal income tax.
The income tax rate is 15% for all taxpayers other than Omani proprietorships (‘establishments’) and limited liability companies (LLCs) that fulfil the conditions of small and medium enterprises (SMEs).
A 3% tax rate applies to Omani enterprises and LLCs that meet the following requirements:
VAT was introduced in Oman on 16 April 2021. The standard VAT rate in Oman is 5% and, in accordance with the Unified Agreement of the Gulf Cooperation Council (GCC) and the Oman VAT Law, there are provisions on zero rate and exceptions.
A 17,5% social security contribution applies to employees who are citizens of Oman, but not to foreign employees. An employee shall pay a contribution of 7% of the salary, and the employer pays the rest which amounts to 10,5%. The employer must also make an industrial injury insurance contribution of 1% of the salary of the employee. Thus, the total amount of monthly social and insurance contributions paid by the employer is 11,5%.
Since January 2021, both employers and Omani employees must make a monthly contribution of 1 Omani riyal for each OMR 100 of the monthly salary (or 1% payment) as part of the implemented employment security scheme. Thus, the total social security contribution is 20,5%, where 8% is paid by the employee and 12,5% is paid by the employer.
Municipal taxes apply to the following items:
There is no real estate tax in Oman.
Restaurants/cafes located in a tourist area or managed under a franchise agreement must charge a 4%. tourist tax.
There are no CFC rules in Oman.
Related party transactions must be considered arm’s length transactions. There are no specific recommendations regarding acceptable methods of determining the market price.
Profit from the sale of securities listed on the Muscat securities market is exempt from taxation. Profit from transfer of other assets is taxed like ordinary income.
Dividends received from Omani entities are exempt from taxation. Dividends from foreign sources are taxed at the same rates as corporate income.
Interest income is taxed like business income.
Foreign companies that do not have a permanent establishment in Oman for the purpose of taxation and receive income in Oman shall pay a withholding tax of 10% of the gross income from the following sources:
Even though dividends and interests were initially included in above list, a royal directive issued by His Majesty Sultan Haitham bin Tarik on the anniversary of His Majesty’s Accession Day on 11 January 2023 resulted in complete suspension of the collection of withholding tax in respect of distribution of dividends and interests.
Oman has entered into 38 double tax conventions (DTCs) with the following jurisdictions:
38 DTCs: Algeria, Belarus, Brunei, Great Britain, Hungary, Vietnam, Egypt, India, Iran, Spain, Italy, Yemen, Canada, Qatar, China, Korea, Lebanon, Mauritius, Morocco, Moldova, the Netherlands, Pakistan, Portugal, Russia, Seychelles, Singapore, Syria, Sudan, Thailand, Tunisia, Turkey, Uzbekistan, France, Croatia, Switzerland, Sri Lanka, South Africa, Japan.
In addition, Oman has signed and ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The multilateral convention came into force for Oman on 1 November 2020.
There are no foreign exchange controls in Oman.