Oman has raised its income tax rate for companies and removed exemptions for small firms, the country’s Ministry of Finance has announced.
In comments carried by state-owned Oman News Agency, the ministry said the income tax rate for Omani and foreign companies had increased from 12 per cent to 15 per cent under a royal decree issued on February 19.
A previous exemption from income tax for firms earning less than OMR30,000 ($78,000) per annum has also been removed with a new reduced rate of 3 per cent now applied from the start of the 2017 tax year.
“The amendment aims at limiting the tax avoidance incidents by tax payers who used to divide the value of their transactions to benefit from the exemption and avoid tax payment,” according to the report.
Companies in the mining and hotel sectors and private schools, universities and nurseries will also no longer be exempt from the tax, Times of Oman reported.
The decree includes amendments to the income tax law designed to simplify tax payment, which will be introduced later. Provisions to the law including the ability to forward losses incurred in any tax year to the next year and deduct them from taxable income will also be maintained.
“It should be noted that the 15 per cent corporate income tax is still below the average international rate which is 25 per cent, which maintain the investors’ revenues and the sultanate’s competitiveness,” ONA said.
Oman announced it would introduce fresh austerity measure at the start of the year to boost non-oil revenues including changes to income tax, new taxation of goods like alcohol and tobacco and changes to fees for hiring foreign workers.
The country posted an OMR5.3bn ($13.76bn) deficit last year, higher than the OMR3.3bn expected as oil prices averaged $39 a barrel rather than the $45 assumed.
This year it is forecasting a deficit of OMR3bn ($7.79bn).