Updates to Oman Income Tax Executive Regulation

OMAN - Updates to Oman Income Tax Executive Regulation

May 2019

On 10 February 2019 the Ministry of Finance in Oman issued Ministerial Decision 14/2019 amending the Executive Regulations to the Oman Income Tax Law. The amendments include changes to applicability of Withholding Tax, enhancement/restriction of tax exemptions, criteria for deductibility of certain expenses, changes to administrative procedures and taxability of small taxpayers.

Key amendments:

  • Industrial activity exemption – Additional criteria laid down to claim industry activity exemption regarding hiring of local manpower;
  • Withholding tax – Introduction of Negative list of services which will not be subject to Withholding Tax and clarification issued for applicability of Withholding Tax on interest and dividend paid;
  • Procedural changes – Taxpayers urged to go digital by mandating filing of tax returns electronically and notifying that assessment orders and assessment queries will be issued electronically;
  • Small taxpayers – Qualification criteria for small taxpayers revised and presumptive tax conditions prescribed;
  • Deductibility of certain expenses – Conditions for deductibility of certain expenses including donations and bad debts made more stringent.

Introduction of Excise Tax (Selective Tax) in Oman

Royal Decree No. 23/2019 dated 13 March 2019 was issued for ratifying the Selective Tax Law in Oman. Executive Regulations following the Royal Decree will be issued in due course.

Selective Tax is introduced in Oman based on the Excise Tax Treaty signed by the Gulf Cooperation Council (GCC) member states. Currently, Excise Tax has been implemented in every member state of GCC except for Oman and Kuwait.

Selective Tax is expected to be made applicable by the middle of June 2019 in Oman, covering the following goods at the following rates:



Carbonated drinks


Energy drinks








Selective Tax will be a single point tax and is expected to be paid by importers and manufacturers. It will be payable on the Retail Sale Price of the product which will be mostly published by the Omani Government from time to time.

Introduction of Value Added Tax (VAT) in Oman

VAT will be introduced in Oman based on the GCC VAT Framework Agreement. Out of the GCC member states UAE, Saudi Arabia and Bahrain have implemented VAT. Oman is expected to be the next member state to implement VAT, possibly in 2020. However, any official announcement on the effective date of VAT implementation is awaited.

Bipin Kapur

Ashish Athavale