Oman: Tax incentives included in economic stimulus plan (COVID-19)

Oman: Tax incentives included in economic stimulus plan

An economic stimulus plan (announced 9 March 2021) is intended to counter the economic effects of the coronavirus (COVID-19) pandemic and includes tax incentives.

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An income tax exemption aimed for new businesses involved in “economic diversification” sectors—expected to cover manufacturing, agriculture, fishing, mining, tourism, and logistics and services—would provide:

  • A five-year tax exemption for new businesses having main activities in the identified economic diversification sectors
  • These main activities to begin between 1 January 2021 and 31 December 2022, and the tax exemption would apply from the date of registration in the commercial registration certificate
  • Rules and conditions relating to the tax exemption to be announced by the Oman tax authorities

Other tax incentives or tax relief measures would include:

  • An income tax exemption for hotel establishments in Oman for tax years 2020 and 2021, to apply for two tax years
  • Installment-based tax payments without the imposition of the additional tax levy (1% per month) during the year 2021
  • A tax rebate (deduction) of 1% for tax year 2021
  • Suspension of withholding tax on dividends and interest for an additional period of five years, from tax year 2020
  • Unlimited carryforwards of losses allowed for tax losses incurred for tax year 2020
  • A reduced tax rate to 12% (from 15%) for small and medium-sized enterprises (SMEs) for the tax years 2020 and 2021
  • An exemption from both tourism and municipal tax levy until the end of 2021 for tourism establishments
  • A grant of a preliminary license for certain type of business (subject to certain terms and conditions) sufficient to allow them to conduct commercial and investment activities without waiting for issuance of the final license
  • A permit to hire three expatriates for companies having foreign investment immediately upon their establishment following issuance of commercial registration

Read a March 2021 report prepared by the KPMG member firm in Oman

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