No in­come tax for small busi­nesses run by Omani cit­i­zens


Mi­cro-busi­nesses owned and op­er­ated by Omani en­trepreneurs will not be el­i­gi­ble to pay any cor­po­rate in­come tax un­der the re­vised Omani In­come Tax Law is­sued by Royal De­cree No 9/2017, it was re­vealed at a high-level sem­i­nar late last week.

Al­though the tax rates have been in­creased, the govern­ment has shown much con­cern for Omani mi­cro and small busi­nesses, ac­cord­ing to one of the tax ex­perts who pre­sented at the event. Omani es­tab­lish­ments and com­pa­nies with a cap­i­tal of not more than RO 50,000 and with a turnover of not more than RO 100,000, em­ploy­ing not more than 15 em­ploy­ees, will be charged only 3 per cent tax. Fur­ther­more, if these en­ti­ties are fully owned and man­aged by Oma­nis or Omani es­tab­lish­ments and em­ploy at least two Oma­nis, they are zero-rated and thus will not pay any tax at all, the ex­pert stated.

Ac­cord­ing to Davis Kal­lukaran, Man­ag­ing Part­ner of Crowe Hor­wath Oman, said the tax in­crease was part of a slew of mea­sures by the govern­ment to shore up rev­enues. Of the es­ti­mated 360,000 business en­ti­ties reg­is­tered in the Sul­tanate, around half of them are thought to be dor­mant. Of the re­main­ing num­ber, only around half are reg­is­tered for in­come tax. Again, out of the reg­is­tered en­ti­ties, only less than 30 per cent file tax re­turns reg­u­larly.

“The govern­ment thought it ap­pro­pri­ate to bring to the fold most of the busi­nesses to con­trib­ute to the na­tion-build­ing process, by widen­ing the tax net,” said Kal­lukaran. “This has been fa­cil­i­tated by re­mov­ing the ba­sic ex­emp­tion of RO 30,000, re­strict­ing the ex­emp­tions to only man­u­fac­tur­ing / industrial units, in­creas­ing the tax rates from 12 to 15 per cent and ex­pand­ing the scope of in­come for col­lec­tion of with­hold­ing tax. The pe­nal pro­vi­sions have also been strength­ened by be­ing harsh on those who are not com­ply­ing with the tax laws.”

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