OMAN Law and Practice Contributed by: Said Al-Shahry, Thamer Al-Shahry, Jeremy Pooley, Maria Mariam Rabeaa Petrou, Mujtaba Ali Kazmi and Salim Al Harthi, Said Al Shahry & Partners
• Omani company; and • permanent establishments.
Special provisions apply to the taxation of income derived from the sale of petroleum. In addition, excise duties were introduced in Oman in 2019 on certain specific goods. Economic Stimulus Plan The Ministry of Finance has published an Economic Stimulus Plan (ESP) as part of its efforts to mitigate the effects of COVID-19 on the economy. The plan addresses the following key areas: • taxes and fee incentives; • stimulating business and investment through, for example, the simplification of procedures and the relaxation of regulations for foreign companies; • SMEs, including a temporary reduction of income tax rates and the postponement of loan repay - ments due for Al Raffd Fund until year 2021; • the labour market/employment, including a reduc - tion in fees for hiring ex-pats; and • banking – the postponement of loan instalments. The ESP introduced several tax measures, including the introduction of certain provisions relating to the carrying forward of losses. The ESP also exempts all companies whose main activity is operating in the economic diversification sectors from income tax for five years. Only activities which commenced between 1 January 2021 and 31 December 2022 are eligible for this exemption (subject to the rules and conditions set out by the Oman Tax Authority). Amendment to Income Tax Law The Income Tax Law was amended in 2020 by RD 118/2020. Key amendments include: • residency provisions to enable the authorities to determine the residential status of both individuals and corporates; and • submission of only one tax return (which must be submitted within four months from the end of the financial year of the taxpayer). Value Added Tax (VAT) VAT was introduced in Oman pursuant to RD 121/2020, promulgating the Value Added Tax Law. The standard
The tax rate is generally 15% of taxable income, although a lower rate of 3% applies to certain small taxpayers where prescribed conditions are met. For these purposes: • “Person” means a natural or juristic person and includes joint ventures and non-Omani partner - ship agreements that do not assume the form of a company. • “Enterprise” includes: (a) an individual enterprise owned by a natural Omani person which exercises in Oman any of the specific activities specified in Article 159 (bis) of RD 28/2009 (the “Income Tax Law”). The owner of the enterprise shall be deter - mined from the commercial or industrial regis - ters or other fiscal records or documents. (b) Omani company that takes the form of part - nership, limited partnership or limited liability company and exercises the activities specified in Article 159 (bis) of the Income Tax Law. • “Establishment” means an establishment solely owned by a natural person who independently carries on a commercial, industrial or professional activity in Oman. The owner of the establishment shall be determined from the commercial or indus - trial registers or other fiscal records or documents. • “Omani company” means any person established in Oman as a company under the legislations of Oman, whether it is commercial, civil or any other company, and whatsoever be the legal form of the company, the nationality of the partners, the pur - pose of its incorporation or the nature of its activity. • “Permanent establishment” means a fixed place of business through which a business is wholly or partly carried out in Oman by a foreign individual or entity either directly or through a dependant agent. A permanent establishment also includes consul - tancy service or any other services where such foreign person provides such service in Oman for a period or periods of not less than 90 days in the aggregate in any 12 months.
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