Oman

The Income Tax Law seeks to tax worldwide income of entities formed in Oman and the Oman-source income of branches and other forms of permanent establishment (PE).

The rate of income tax is uniform for all types of business entities, regardless of whether it is a corporate entity and/or whether it is registered or not.

The income tax rate is 15% for all taxpayers other than Omani proprietorships (‘establishments’) and limited liability companies (LLCs) that fulfil the conditions of small and medium enterprises (SMEs).

For Omani proprietorships (‘establishments’) and LLCs that meet the following requirements:

• registered capital does not exceed 60,000 Omani rials (OMR) at the beginning of the tax year
• gross income does not exceed OMR 150,000 for any tax year
• average number of employees during the tax year does not exceed 25, and
• taxpayer activities do not include air/sea transport; extraction of natural resources; banking, insurance, or financial services; public utility concessions; or other activities to be decided by the Minister of Finance after approval by the Council of Ministers,

a 3% tax rate is effective and is coupled with a requirement for SME taxpayers to file income tax returns.

Petroleum income tax

Special provisions are applicable to the taxation of income derived from the sale of petroleum. The tax rate specified for such companies is 55%. However, the tax rates are applied on income as determined by the individual Exploration and Production Sharing Agreement entered into between the government of Oman and the company engaged in the sale of petroleum. Under these agreements, the government pays the company’s share of income tax from amounts withheld from the government’s share of production. Consequently, the income tax is not actually borne by the company.

Pillar Two

The Sultanate of Oman has issued Royal Decree 70/2024 on 31 December 2024 that introduces a Top-up Tax (the ’Law‘), which marks a significant milestone in the evolution of Oman’s tax framework. The Top-up Tax takes the form of an Income Inclusion Rule (IIR) and will apply to MNEs that are in scope of Pillar Two. Please note that the Executive Regulations are yet to be issued in this regard.

The Top-up Tax (hereafter referred to as ’IIR‘) is effective from 1 January 2025. Notably, the IIR will only apply to Oman entities that are part of an MNE group with global consolidated revenues (in at least two of the preceding four fiscal years) of at least 750 million euros (EUR), including MNEs headquartered in and outside Oman.

The tax will be imposed on parent entities in Oman that have an ownership interest in low-taxed foreign constituent entities (with an effective tax rate of less than 15%). While parent entities in Oman will be liable for the tax, the tax will only apply on the low-taxed profits of their foreign constituent entities and specifically excludes the profits of Oman entities.

The specifics on the IIR, including details on the calculation methodology, safe harbours, treatment of PEs, compliance requirements, and other implementation aspects will be issued in the Regulations. Based on the Law, it is expected that the IIR will be in accordance with the Organisation for Economic Co-operation and Development (OECD) Global Anti-Base Erosion (GloBE) Model Rules. 

There is no indication on whether Oman will also introduce a Domestic Top-up Tax (DMTT) to capture low-taxed profits in Oman. While Oman’s corporate tax rate is 15%, there may be instances where an MNE group’s effective tax rate in Oman is less than 15% for Pillar Two purposes (due to differences in the calculation methodology and required adjustments, freezone exemptions, and other tax benefits available in Oman). Under the current law, such low-taxed profits would not be subject to Top-up Tax in Oman (note they could be taxed under other jurisdictions’ Pillar Two rules, depending on the MNE group’s structure).

For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.

Local income taxes

There are no regional or local income taxes in Oman.