On 23 December 2015, the lower house of the Council of Oman has approved a number of changes to Income Tax Law 2010, proposed by the Oman Government, for immediate implementation. The Government of Oman has not yet officially published this measure. The proposed changes that are likely to apply to companies and other entities include:
- The corporate tax rate is expected to be increased from 12% to 15%.
- The tax free threshold (standard deduction) of RO30,000 (US$78,000) is likely to be removed.
- Certain companies that were not subject to income tax based on their business activities, industry sector or revenues may now be subject to tax.
It has also been reported that companies in the oil and gas sector may be subject to income tax at 35%. Liquid Natural Gas companies may be subject to corporate tax at 55% to bring their taxation in line with oil companies.
The dramatic and continuing fall in oil prices since June 2014 has resulted in Oman’s fiscal income decreasing by over 60%. The proposed tax changes are aimed to manage fiscal shortfalls and bridge the expected budget deficit in 2016.
The above changes are expected to come into force for tax year 2016, starting from 1 January 2016, subject to timely approval by the State Council.
