Corporate - Tax credits and incentives

Last reviewed - 19 July 2022

Foreign tax credit

A foreign tax credit is available to Omani companies or establishments (proprietorships) that suffer foreign taxes on income that is also taxed in Oman. The credit is limited to the amount of tax incurred in Oman. The taxpayer is required to submit an application to the Tax Authority (TA) to claim such credit.

Exempt activities

Up to introduction of Royal Decree 9/2017 on 26 February 2017, income from the principal activities listed below was exempt from tax, provided an exemption was applied for and obtained.

  • Industry and mining.
  • Export of products manufactured or processed locally.
  • Operation of hotels or tourist villages.
  • Agriculture and animal husbandry and the processing of agricultural produce.
  • Fishing and fish processing and aquaculture.
  • University education, college or institutes of higher studies, private schools, nurseries, training colleges, and institutes.

The exemption is valid for a period of five years from the date of commencement of production or the practice of activities and may be made subject to such conditions as the Minister of Commerce and industry may specify. The exemption was renewable for a period not exceeding five years, subject to approval by the Financial Affairs and Energy Resources Council.

Effective for tax years beginning after 31 December 2016, tax exemptions are available only for industrial (manufacturing) activities. Exemptions are no longer available for mining, export of locally manufactured goods, operation of hotels and tourist villages, agriculture, fishing, or education.

In addition, new industrial exemptions are limited to the initial five-year period, with no renewal.

Existing tax exemptions are not impacted, but the changes will look to impact pending renewal applications.

Further, companies registered with the Special Economic Zones and Freezones in Oman may be able to avail 25 to 30 years of tax exemptions, subject to meeting certain conditions.

See Exempt income in the Income determination section for a description of other income items exempt from tax.