Oman: Oman's New Tax Law

Oman's latest Royal Decree introduces sweeping amendments to the Income Tax Law of 2009 and was formally published on 26 February 2017.

Whilst the full text of Royal Decree 09/2017 (the Amendment) is being reviewed in more detail, here are a few details we are able to share in relation to key provisions:

Corporation tax – the impact

  • The Amendment increases the standard corporation tax from 12 per cent to 15 per cent.
  • The minimum tax-free threshold of OMR 30,000 has been scrapped.

Rather surprisingly, these provisions will be applied retrospectively as of 1 January 2017, suggesting that the government may have been trying to publish the Amendment prior to the start of 2017.

Any tax breaks?

There is a carve-out for companies (specifically aimed at the SME segment) that fulfil certain criteria, including but not limited to those:

  • having annual revenue of OMR 100,000 or less;
  • who employ 15 employees or fewer; and
  • with share capital of OMR 50,000 or less.

These companies will benefit by paying corporation tax of only 3 per cent.

There are further tax breaks offered to companies fulfilling further criteria, which will be exempted from paying corporation tax at all. Further guidance on this is expected.

Withholding tax – the story so far

In a move that signals one of the most significant amendments to withholding tax in Oman, the Amendment introduces new types of income, which will now be subject to withholding tax at the rate of 10 per cent.

In addition to the existing categories relating to royalties, payments for research and development, use of computer software and fees for management, withholding tax will apply to fees for the performance of services, payments of dividends, or interest. These extensions to the withholding tax regime came into force on 27 February 2017.

What is significant is that the text of the Amendment suggests that all interest payments by borrowers or issuers of securities to lenders and/or investors outside of Oman will be subject to withholding tax from 27 February 2017.

Similarly, all dividends paid by Omani companies to their foreign shareholders will be subject to withholding tax.

The Amendment applies only to those companies and entities that are subject to the Income Tax Law. Accordingly, companies located in Free Zones in Oman will, on the face of it, not be subject to these amendments.

Certain parties may also benefit from the terms of any double taxation agreements or treaties with Oman.

It remains to be seen whether further guidance will be issued as to how the Amendment affects existing cross-border financing and corporate structuring arrangements.

Who is resident in Oman?

In terms of corporate structuring arrangements, further clarity is needed as to what constitutes a non-Omani resident and in-depth analysis of the double tax treaties between Oman and other countries should be carried out. We intend to provide more information on these important factors as the new framework becomes clearer.

Potential impact on cross-border financing

The impact on cross-border financing will be seen through the gross-up provisions one would typically expect to see. The provision will usually indicate that, if there is a mandatory withholding by operation of law (as would arise by virtue of the Amendment), then the Omani entity shall "gross up" the payment so that the receiving party is made whole and receives the net amount free of such deductions. Similar provisions are found in debt capital market, project financing and general syndicated lending transactions as standard. Borrowers and issuers of debt securities who have agreed to such gross-up provisions will need to consider whether they are required to find a further 10 per cent or more to service their existing repayment obligations to meet their contractual obligations as well as the payment to the Secretariat General. Payments by borrowers or issuers to, inter alia, document banks or agent banks might also be caught in a similar manner for withholding tax under the Amendment.

What else?

The Amendment makes various other changes to the Income Tax Law. These include, inter alia:

  • a general increase in reporting obligations;
  • more severe penalties for breaching those obligations – both fines and imprisonment;
  • the treatment of donations and calculation of expenses; and
  • a new chapter on the treatment of taxable income in Islamic financing transactions (which provisions come into force on 1 January 2018).

Why now?

The Amendment reflects the government's promise to promote a fiscal policy designed to increase revenue generation for the country. Given the impact of the budget deficit and lower for longer oil prices, these amendments to the existing tax regime are timely and were expected some time ago.

Initial considerations:

  • What do your supply contracts say about responsibility for taxes and withholding taxes? Will your suppliers now seek to pass these increases on to you?
  • Do your key contracts include change of law or economic stabilisation clauses and could there be any triggers for an event of default or an option for you or a counterparty to terminate a contract?
  • Does your company receive, and pay for, services from suppliers outside of Oman? Pay dividends to foreign shareholders?
  • Does your company pay interest on loans to lenders or investors outside of Oman and is this likely to be a notifiable event to your lenders or investors?
  • Has your company enjoyed any tax exemptions, deductions or discretionary treatment in the past?
  • Is your corporate governance structure robust enough to manage the risks of potential fines and personal liability?

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
15 Aug 2017, Workshop, Singapore, Singapore

The development of the global LNG market and the commoditisation of hitherto expensive floating storage technology (both FSUs and FSRUs) have provided an impetus for a modern twist on power projects, allowing power stations to accept gas from international LNG cargoes.

This workshop seeks to give insights and a better understanding of power generation from LNG and gas.

19 Sep 2017, Seminar, New York, United States

This year's highly anticipated Energy Outlook Series event will draw industry leaders, members of the diplomatic corps, congressional staff and members of the press, among others, for a half-day of panel discussions covering significant developments in the global energy sector.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.