On 9 March 2021, His Majesty Sultan Haitham bin Tarek, announced an ESP to support the Sultanate’s efforts to counter Covid-19’s effects on the economy. (Click here for the related tax alert).

Some of these tax relief measures have been extended by the Tax Authority (TA), which are summarized in the table below:

 

Tax relief measures

Nature of extension

Earlier applicability as per ESP

Recent update by TA*

Tax rebate of 1% of the tax due (up to a maximum of OMR 10,000) for taxpayers who file their tax returns and pay taxes within the prescribed due date

 

Tax year extended

Applicable only for tax year 2021 for all classes of taxpayers

Made applicable for tax year 2020 as well for all classes of taxpayers thereby offering immediate relief

Tax rate for small and medium enterprises (SMEs) reduced to 12% from 15% for the tax years 2020 and 2021

Taxpayer’s coverage expanded

Applicable for SMEs defined as per:

 

·  SMEs Development Authority (Riyada); or

·  SMEs not registered with Riyada but registered with the Ministry of Commerce, Industry and Investment Promotion (MOCIIP)

Extended to additional classes of taxpayers, i.e. Omani companies and establishments but excluding permanent establishments such as branch offices and Oman operations of foreign companies

 

Such taxpayers to cumulatively fulfil the below criteria (as currently applicable to SMEs registered with Riyada):

 

·  Turnover for the tax year should be less the OMR 5 million; and

·  Total number of employees is less than or equal to 150

 

 

*Please note that the extension of these tax relief measures earlier announced under the ESP have been captured in this tax flash based on the changes noticed on the Oman Tax Authority’s portal (TA system) on 27 April 2021 and our subsequent informal discussion with the TA. 

How does it impact?

  • For eligible taxpayers who have filed the tax returns and paid requisite taxes for tax year 2020: Refund mechanism to be discussed with the TA;
  • For eligible taxpayers who are yet to file tax returns and pay taxes for tax year 2020: Avail the extended benefits as applicable.