Specifics of taxes in Oman

Oman is a country with a unique taxation system that attracts the attention of foreign investors due to its favorable tax regime. Unlike many other countries, Oman has long been doing without a number of standard taxes, such as personal income tax. However, in recent years, the country's tax policy has undergone significant changes aimed at increasing budget revenues and ensuring sustainable economic growth. In our material we will talk about the specifics of taxes in Oman, including corporate taxation, VAT and other fees that are important to consider when doing business in this country.

Taxes for individuals in Oman

Oman is one of the few countries in the world where individuals do not pay income tax. This rule applies to both nationals and foreign residents, making the country extremely attractive to highly skilled professionals and entrepreneurs looking for favorable living and working conditions. Due to the absence of income tax, individuals can keep all of their earnings, which is particularly attractive to expats coming to work in sectors such as oil and gas, construction, banking and tourism.

However, there are certain fees and contributions that are mandatory for individuals. For example, all Omani citizens are required to pay social contributions, which amount to 7% of their salary. These contributions go towards providing a pension fund and social security. Employers are also required to contribute their share of 10.5% of an employee's salary for the same purposes. In total, this amounts to 17.5% of an Omani citizen's salary going towards social security.

Foreign residents working in Oman may not pay social contributions or pension contributions under the Omani system, but they may participate in private pension programs or insurance plans, which is governed by their own contracts and terms of employment.

As of 2021, Oman introduced a value added tax (VAT) of 5%, an important part of the country's tax reforms. Although this tax does not directly target personal income, its introduction has had an impact on residents' spending, as VAT applies to most goods and services. Nevertheless, basic necessities, medical and educational services remain exempt from VAT, which somewhat reduces the tax pressure on citizens.

It is also worth noting that in recent years the Omani government has been discussing the possibility of introducing new types of taxes for individuals as part of the broad economic program Vision 2040, aimed at diversifying the economy. So far, final decisions on the introduction of income tax have not been made, but such measures may be considered in the future to increase government revenues and finance infrastructure projects.

In summary, Oman's income tax system, which focuses on no income tax, makes the country an attractive place to live and work, but also requires careful attention to mandatory contributions and the impact of indirect taxes on spending.

Business Taxes in Oman

Oman's tax system, which is focused on attracting investors and business development, offers a number of advantages. One of the key taxes affecting businesses is corporate tax. In recent years, Oman's tax policy has undergone changes as part of the Vision 2040 program aimed at diversifying the economy and reducing dependence on the oil sector. Let's talk about the main taxes for businesses.

Corporate Tax

Companies operating in Oman must pay corporate tax. The standard corporate tax rate in the country is 15%, which is relatively competitive compared to other states in the region. Small and medium-sized enterprises (SMEs) with annual revenues of less than 30,000 Omani riyals (about $78,000) benefit from tax exemptions: such companies pay tax at a reduced rate of 3%.

Foreign companies operating through permanent establishments or branches in Oman are also required to pay corporate tax at a rate of 15%. However, foreign investors participating in joint ventures or operating in Free Economic Zones (FEZs) can benefit from a number of tax incentives, including tax exemptions for up to 30 years, depending on the sector and size of the investment.

Dividend and Capital Gains Taxes

There is no tax on dividends in Oman, which benefits shareholders who receive income from the distribution of company profits. This creates an added advantage for attracting investment into the country's economy as investors can expect to receive net dividend income without having to pay taxes.

There is also no capital gains tax for legal entities, which encourages long-term investment and business development. This is particularly attractive for companies operating in strategic sectors of the economy, such as oil and gas, construction and logistics.

Value Added Tax (VAT)

As of 2021, Oman has introduced Value Added Tax (VAT) at a standard rate of 5%. VAT applies to most goods and services provided in the country, which affects the final cost of products to consumers. However, some business sectors such as healthcare, education, and basic products (including food) are exempt from VAT. It is important for companies to consider registering for VAT if their annual turnover exceeds a set threshold of 38,500 Omani riyals (about $100,000).

License fees and other fees

In addition to basic taxes, companies operating in Oman are required to pay fees to obtain a commercial license. The amount of these fees depends on the type of business and the location of the company. For large multinational corporations and companies operating in strategic sectors, there are special licensing conditions and possible tax incentives depending on the scale of investment and job creation for the local population.

As a result, Oman's tax system offers a relatively favorable business environment, especially for foreign companies and small businesses. The absence of taxes on dividends and capital gains, low corporate tax rates for SMEs and ample opportunities for tax incentives make the country attractive for doing business in the Gulf.

Property Taxes in Oman

In Oman, property taxes play an important role in regulating the real estate market, but the taxation system in this area remains relatively simple and transparent. While there are no direct annual taxes on property ownership for individuals, there are several types of fees that need to be considered when buying, selling or renting real estate.

Registration fee when buying real estate

When purchasing real estate in Oman, there is a registration fee that actually acts as a transaction tax on the property. This fee is 5% of the purchase price and is payable by the buyer upon registration of title. This fee is fixed and is mandatory for all real estate transactions, including both commercial and residential properties.

For foreign citizens to buy real estate is possible only in certain areas - the so-called freehold zones (freehold zones). These zones allow foreigners to purchase residential or commercial real estate, but the same registration fees apply. It is important to note that foreign buyers need to meet a number of requirements to be allowed to purchase real estate, including a minimum investment in the property, which can affect their costs.

Real Estate Rental Fees

There is no direct tax on rental income in Oman, but owners of rental properties must consider license and administrative fees. Depending on the region and the type of property being rented, there may be fees for issuing a license to rent out residential or commercial premises.

Real Estate Operating Costs

Although there is no property ownership tax in Oman, owners of commercial properties and residential complexes must consider the costs of operation. These costs include payments for utilities, building maintenance, and possible fees for infrastructure improvements to the neighborhood in which the property is located. These fees are not taxes in the usual sense, but can have a significant impact on the overall costs of owning and operating a property.

Inheritance and Gift Tax on Real Estate

There is no inheritance and gift tax on real estate in Oman, which is beneficial for individuals who transfer property to their relatives. This makes the process of transferring property within the family easier and less costly than in countries with high inheritance taxes.

Thus, Oman's real estate tax system remains highly attractive to both residents and foreign investors. The absence of annual estate tax and inheritance or gift taxes, along with moderate registration fees on purchase, make Oman's real estate market competitive with other countries in the region.

Obtaining an Oman Gold Visa

It is possible for individuals in Oman to obtain a [gold visa]((https://oneworld.id/programs/residency-of-oman/) and the corresponding residency permit. One World Migration helps to obtain an Omani gold visa for investment, from the application stage to the delivery of the relevant documents (visa, passport, etc.). For more information about the program, please visit our website.