Oman has dropped the Income Inclusion Rule from its Pillar Two Top-up Tax Law and added registration, filing, record-keeping and penalty provisions for multinational groups operating in the country.
The Oman Tax Authority announced on 1 November 2026 that Royal Decree No. 101/2026 has amended the Pillar Two Top-up Tax Law (Royal Decree No. 70/2024), removing the Income Inclusion Rule (IIR) so that the law focuses solely on the Qualified Domestic Minimum Top-up Tax (QDMTT). The amendments also set out registration, filing, record-keeping and penalty requirements for multinational enterprise (MNE) groups.
Sultan Haitham bin Tarik issued the decree on 29 October 2026, and it was published in Official Gazette Issue No. 1672 on 1 November 2026. The authority announced the changes in a post on X. The decree took effect on 2 November 2026, and its main operative articles, Articles 1, 2, 3, 5, 6, 7, 8, 9 and 3 bis, apply retroactively to tax years starting on or after 1 January 2025.
Why the law was changed
The authority said the amendments complete the legislative framework for the tax and align national legislation with the practical requirements of the Pillar Two rules issued by the OECD/G20 Inclusive Framework. Its study found that the QDMTT alone achieves the primary objective of the rules and preserves Oman’s right to collect top-up tax on profits generated within the country.
The law has been retitled the “Law on Supplementary Tax on Constituent Entities of Multinational Enterprise Groups” to match approved Pillar Two terminology. Its definitions and scope provisions have also been revised.
Who is covered
Under Article 2, the law applies to constituent entities in Oman belonging to multinational enterprise (MNE) groups with annual consolidated revenues of at least EUR 750 million, or the equivalent in Omani rials, in the consolidated financial statements of the Ultimate Parent Entity (UPE). The threshold must be met in at least two of the four fiscal years immediately preceding the year under assessment, and it is adjusted proportionally for fiscal years longer or shorter than 12 months.
Excluded entities
The following are excluded from top-up tax and effective tax rate (ETR) calculations:
- government entities, units of the state administrative apparatus and other public legal persons;
- recognised international organisations;
- non-profit entities, including associations, federations, civil society institutions and private public-benefit foundations;
- pension funds;
- investment funds and real estate investment vehicles that qualify as an Ultimate Parent Entity; and
- other entities specified under the OECD GloBE implementation guidelines by a decision of the chairman of the Tax Authority, following approval by the Council of Ministers.
Excluded entities must still report their gross revenues, data and assets in Pillar Two Information Returns, and they count towards threshold tests. Under Article 3 bis, general tax exemptions in other Omani laws or royal decrees do not apply to the top-up tax unless expressly stated.
Registration, filing and record-keeping
- Registration: Constituent entities must register within 120 days of becoming subject to the tax and designate a Designated Filing Entity (DFE) in Oman. If none is appointed, the chairman will designate the ultimate parent entity located in Oman.
- Returns: The Top-up Tax Return and the GloBE Information Return (GIR), with audited accounts, are due within 15 months after the end of the relevant fiscal year. Amended returns must be filed within 30 days of discovering an error or omission, and within three years of the original filing.
- Payment: Tax is due on the filing deadline. A late payment penalty of 1% of the tax due applies for each month or part of a month.
- Records: Entities subject to the law, including exempt entities, must keep accounting books, records, documents and supporting attachments for 10 years after the end of the relevant year.
Powers and disputes
The DFE may file an objection with the chairman against a top-up tax assessment and appeal the decision to the Tax Grievance Committee under the procedures and timelines of the Income Tax Law. The authority may summon entities to discuss tax matters, and designated officials now hold judicial enforcement status, allowing them to enter premises, audit records and seize evidence of infractions.
Penalties
- Major offences: Intentional tax evasion, and intentional failure to register, file returns or pay, carry imprisonment of six months to three years, a fine of OMR 5,000 to OMR 50,000, or both. Repeat violations within five years allow the fine to be doubled and the prison term increased by up to 50%.
- Companies: Fines range from OMR 50,000 to OMR 200,000 where offences are committed in a company’s name or on its account through fault, gross negligence, approval or cover-up by directors or officers.
- Lesser violations: Failure to keep the 10-year records, supply accurate data or attend a summons carries up to one month’s imprisonment and/or a fine of up to OMR 2,000.
- Administrative penalties: These may not exceed the higher of 25% of the top-up tax due or OMR 10,000.
Settlement
Public prosecution requires a written request from the chairman. Reconciliation is permitted before referral by paying 50% of the minimum to 50% of the maximum fine, or before final judgment by paying double the maximum fine. In both cases, all original taxes, delay fees and administrative fines must be paid in full.
