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Same Rate, Whoever Owns the Company

Foreign investors tend to ask one question first: will my company in Oman pay more tax than a local one? The answer is no. The Income Tax Law, issued by Royal Decree 28/2009, sets a standard rate of 15 percent on taxable income. It applies to any Omani company, and the law defines an Omani company as one set up under Omani law, whatever the nationality of its partners. This guide explains how Oman corporate tax applies to foreign-owned firms, and where their position really differs.

Tax residence follows where the company is set up or run. Since Royal Decree 118/2020, a company counts as tax resident if it was established in Oman, or if its actual place of management or head office is here.

The tax year is the calendar year. It runs from 1 January to 31 December. According to the Tax Authority, a new company's first accounting period can be shorter than 12 months or as long as 18 months, depending on when its commercial registration starts.

Oil and gas are the main exception. The Tax Authority's tax rates page lists 55 percent for oil and gas exploration companies, based on their concession contracts. Almost every other business pays 15 percent or the small business rate of 3 percent.

Company or Branch: How Your Structure Changes the Tax

A foreign investor usually enters Oman in one of two ways. One is a local company, often a limited liability company, set up under the Foreign Capital Investment Law issued by Royal Decree 50/2019. The other is a branch of the parent company abroad, which the tax law treats as a permanent establishment.

A branch is not the only way to create a taxable presence. Under Article 2 of the law, a foreign firm that provides services in Oman for 90 days or more in any 12 months has a permanent establishment, even without an office. A building site that runs for more than 90 days counts too.

Both routes pay 15 percent on profit. Article 112 applies the same rate to an establishment, an Omani company and a permanent establishment. The difference shows up in the reliefs each structure can reach.

Only local companies can use the 3 percent rate. The law limits the small business rate to Omani individuals and to Omani companies in four forms: the one person company, the general partnership, the limited partnership and the limited liability company. A branch of a foreign company is not on that list, and neither is a joint stock company.

If you are still choosing a structure, compare our guides to opening a foreign company branch in Oman and to the foreign investment license in Oman. Our company formation services in the Sultanate of Oman handle either route.

The 3 Percent Rate for Small Companies

A small foreign-owned LLC can pay just 3 percent of its taxable income, as long as it meets every condition at once. The Tax Authority's income tax questions page lists the current limits.

Capital of OMR 60,000 or less. This is the capital shown in the commercial register at the start of the tax year.

Gross income of OMR 150,000 or less. This is measured over the whole tax year, before any costs are taken off.

No more than 25 workers on average. The count includes every worker, whatever the type, place or length of their work.

No excluded activity. The Tax Authority excludes professional activities. The law also excludes sea and air transport, banking, insurance, financial institutions, natural resource extraction and public utility concessions.

The published text of the law still shows lower limits of OMR 50,000 in capital, OMR 100,000 in gross income and 15 workers. The law lets the Tax Authority chairman change these limits with Council of Ministers approval, so check the current figures before you plan around them. If a company stops meeting a condition, it must tell the Tax Authority within 15 days, and the 15 percent rate then applies from the following tax year.

Large Multinational Groups Face a Minimum Tax

Royal Decree 70/2024 added a top-up tax for large multinational groups, in force since 1 January 2025. It applies to group members in Oman where the group's yearly revenue reached 750 million euros in at least 2 of the 4 years before the year being taxed.

The aim is simple. If the group's effective tax in Oman falls below 15 percent, the top-up tax lifts it to that level. Government bodies, international organisations, non-profit bodies and pension funds are outside its scope. Most small and mid-sized foreign investors will never meet this threshold, but subsidiaries of global groups should plan for it.

Withholding Tax on Payments to the Foreign Parent

Foreign-owned companies often pay their parent for services, brands or software. These payments can trigger withholding tax, which is where Oman corporate tax on foreign groups is felt most often.

The rate is 10 percent of the gross payment. It covers royalties, research and development fees, fees for using software, management fees and fees for services. It applies when the person paid is not resident and has no permanent establishment in Oman.

The payer must pay it over by the 14th day. The Omani company deducts the tax and pays it to the Tax Authority by the 14th day after the end of the month of payment. It must also send a copy of the form to the person paid.

Some services are left out. The Tax Authority does not apply the tax to fees for conferences and exhibitions, transport and insurance of goods, training, air tickets and hotel stays abroad, board meetings and reinsurance. Services linked to an activity or property outside Oman are also outside it.

Dividends need a separate check. The law lists dividends, but the government has suspended collection of this tax on dividends and interest. In 2022 the Capital Market Authority said the suspension had been extended to 2025, so confirm the current position before your first payout.

A tax treaty can lower these charges. The Tax Authority's list of double tax agreements shows 44 treaties, including those with India, the United Kingdom, China and Singapore.

Oman Corporate Tax Deadlines: Registration, Returns and Payment

Register when you set up. Article 11 of the law requires every taxpayer to apply for a tax card during incorporation or licensing. The card costs OMR 10, lasts two years, and is needed to deal with banks and to renew work permits with the Ministry of Labour.

File within four months at 15 percent. A company taxed at 15 percent files its return within four months of the end of the tax year, with audited accounts attached. For a December year end, that means by 30 April.

File within three months at 3 percent. A company on the small business rate files within three months, showing its gross income and costs. The tax falls due on the same date as the return.

File even in a bad year. Every holder of a commercial registration must register and file, including a company with losses or no activity. A loss can be carried forward for up to five years.

Penalties and Recent Changes

Late payment adds 1 percent a month on the unpaid tax. A late return can bring a fine of OMR 100 to OMR 2,000. Understating income can cost 1 to 25 percent of the tax difference. Failing to apply for a tax card can bring a fine of OMR 200 to OMR 5,000.

Two recent decisions changed the Executive Regulations. Decision 313/2025, in force since 17 November 2025, adds gifts to registered waqf foundations to the list of deductible donations, which the Executive Regulations cap at 5 percent of gross income. Decision 180/2026, published in July 2026, applies from the 2027 tax year. It only allows costs incurred to meet a government decision if they are needed for the business, approved by the Tax Authority chairman, and not caused by a breach.

Personal income tax starts in 2028. Royal Decree 56/2025, published on 30 June 2025, creates a separate 5 percent tax on individuals whose gross income exceeds OMR 42,000 a year. It applies from 1 January 2028 and does not change the company rates above.

Frequently Asked Questions

Does a foreign-owned LLC pay more tax than an Omani-owned one?

No. Both are Omani companies under the law and pay 15 percent, or 3 percent if they meet the small business conditions.

Can a branch of a foreign company use the 3 percent rate?

No. The law limits that rate to Omani individuals and to Omani companies in four forms, and a branch is taxed as a permanent establishment at 15 percent.

Is tax due on dividends received from another Omani company?

No. Article 115 exempts dividends that an Omani company receives from shares it holds in another Omani company.

Does corporate tax replace VAT?

No. VAT is a separate tax at 5 percent, with its own registration once taxable supplies pass OMR 38,500 a year.

City Squares is an authorised agent of the Ministry of Commerce, Industry and Investment Promotion, based in Muscat. Our post company formation services in the Sultanate of Oman help foreign-owned companies with tax cards, filings and ongoing compliance. Tax rates, limits and deadlines change by decision, so confirm the current figures with the Tax Authority before you commit.