In Oman, employers have several tax responsibilities. For Omani nationals, employers are required to contribute 10.5% of the employee's gross salary to the Public Authority for Social Insurance (PASI) for Social Security. Expatriate employees are exempt from this.

Occupational Injuries and Diseases Insurance

This insurance is applicable to all employees, both Omani and expatriate. Employers are required to contribute 1% of the employee's gross salary to the Public Authority for Social Insurance (PASI).

Job Security Fund

The Job Security Fund applies to all employees, both Omani and expatriate. Employers are required to contribute 1% of the employee's gross salary to the Job Security Fund.

Corporate Income Tax (CIT)

Omani companies and foreign companies with a permanent establishment in Oman are subject to Corporate Income Tax (CIT). The standard rate is 15%, but a reduced rate of 3% may be applicable under specific, qualifying conditions. The Oman Tax Authority (OTA) is the authority responsible for CIT.

Important Notes

Payment deadlines vary depending on the tax type. Specific exemptions may apply under certain circumstances. Employers are obligated to maintain accurate payroll and tax records for auditing purposes.

In Oman, there are several types of employee tax deductions. The applicability and rates of these deductions vary based on the employee's nationality and the specific fund.

Social Security Contributions

This deduction is applicable only to Omani nationals, with expats being exempt. The deduction rate is 7% of the employee's gross salary. The calculation for this deduction is the gross salary multiplied by 7%. The authority responsible for this deduction is the Public Authority for Social Insurance (PASI).

Job Security Fund

The Job Security Fund deduction is applicable to all employees, both Omani and expatriate. The rate for this deduction is 1% of the employee's gross salary. The calculation for this deduction is the gross salary multiplied by 1%. The Job Security Fund is the authority responsible for this deduction.

Personal Income Tax (PIT)

Currently, there is no personal income tax in Oman for residents or non-residents.

Important Notes

Employee tax deductions apply based on nationality and whether certain funds are applicable to both Omani nationals and expatriates. Employers are responsible for withholding and remitting employee social security and Job Security Fund contributions on behalf of their employees.

In Oman, the standard VAT rate is 5%. This rate applies to the majority of services supplied within the country.

Zero-Rated Services

Certain services in Oman are zero-rated, meaning VAT is charged at 0%. These services generally include exports of services, international transport and related supplies, supply of certain medical services and related goods, and supply of certain educational services.

Exempt Services

There are also some services that are exempt from VAT altogether. These include financial services, residential real estate, and bare land supplies.

VAT Filing Procedures

Businesses that exceed the mandatory VAT registration threshold must register with the Oman Tax Authority. VAT returns and payments are typically due on a quarterly basis. The Tax Authority website provides specific deadlines and filing procedures.

Important Notes

The full list of zero-rated and exempt services is extensive. Businesses must maintain accurate records to support their VAT returns.

Oman provides a variety of tax incentives to draw foreign investment and stimulate economic growth.

Corporate Income Tax Exemption

This is a partial or full exemption from corporate income tax (CIT). Businesses established under the Foreign Capital Investment Law (FCIL) can receive a 5-year CIT exemption, with a potential extension for an additional 5 years depending on factors like location and job creation. Companies operating within designated Special Economic Zones (SEZs) and Free Zones can enjoy extended CIT exemptions, ranging from 10 to 30 years, subject to specific requirements. The application process varies depending on the specific incentive program. Generally, it involves submitting proposals to the relevant authorities like the Ministry of Commerce and Industry (MOCI) or the respective SEZ/Free Zone authority.

Import Duty and Tax Exemptions

This is an exemption from customs duties and import taxes on machinery, equipment, and raw materials used in production. Incentives are often offered to encourage investment in priority sectors identified by the government. Businesses operating within SEZs and Free Zones typically enjoy exemptions on import duties and taxes. Similar to the CIT exemption, the application process depends on the specific program. Consult with the relevant authorities for details.

Reduced Omanization Requirements

This involves relaxed requirements for employing Omani nationals in certain sectors or locations. Some industries, particularly those requiring specialized skills, may qualify for reduced Omanization rates. Businesses operating outside major cities may have lower Omanization quotas. Contact the Ministry of Labour for information on Omanization requirements and potential exemptions for your specific business.

By understanding these tax incentives and navigating the application process, businesses can significantly reduce their tax burden and enhance their investment appeal in Oman.