Corporate - Income determination

Last reviewed - 11 February 2024

Inventory valuation

Inventory should be valued using a method that complies with International Accounting Standards.

Capital gains

Gains on sales of securities listed on the Muscat Securities Market are exempt from taxation. Gains on transfers of other assets are taxable as ordinary income.

Dividend income

Dividends received from Omani entities are exempt from taxation. Foreign-source dividends are taxable at the same rates as corporate income.

Stock dividends

There are no provisions in the tax law that address stock dividends.

Interest income

Interest income is taxable as business income.

Rent/royalty income

Rental income and royalties are taxed as business income.

Unrealised exchange gains/losses

Unrealised exchange gains are not taxable. Similarly, any unrealised loss is not deductible from the total taxable income.

Exempt income

The following income is exempt from income tax in Oman:

  • Dividends received from an Omani company.
  • Profits or gains on disposal of securities listed on Muscat Security Market.
  • Omani marine companies, whether wholly owned by Omanis or with foreign and Omani ownership and registered in Oman, are exempt from tax. Foreign marine companies conducting activities in Oman through an authorised agent are exempted from tax with effect from the date of commencement of activity, provided that reciprocal treatment is afforded by the country of the foreign company.
  • Income realised by foreign airlines carrying on business through PEs in Oman is exempt from tax. This exemption is limited to the extent of the income from operating airplanes for international transport, provided reciprocal treatment is accorded in the airline’s home country.
  • Income realised by investment funds established in Oman under the Capital Market Authority Law or established overseas for dealing in shares and securities listed on Muscat Security Market is exempt.
  • Foreign companies engaged in oil and gas exploration activities, while taxable under the law, normally have their tax obligations discharged by the government under the terms of the Exploration and Production Sharing Agreement.
  • Foreign companies working for the government in projects deemed to be of national importance may be able to negotiate a tax protection clause whereby any tax paid by them is reimbursed by the government.

See Exempt activities in the Tax credits and incentives section for a description of exemptions from tax for income from certain principal activities.

Foreign income

Worldwide income of an entity formed in Oman is taxed in Oman. Credit for foreign taxes paid is given under the law; however, this may not exceed the amount of Omani tax payable on such income.

The Oman tax law does not contain rules on deferral of foreign income.