Scores of newly launched Omani businesses are eligible for income tax waivers spanning a total of five years, provided the focus of their operations align with key sectors that are at the heart of the Omani government’s economic diversification strategy.
The gesture stems from the Economic Stimulus Plan (ESP) first announced by His Majesty Sultan Haitham bin Tarik on March 9, 2021 as part of a comprehensive strategy to help mitigate the adverse impacts of the coronavirus pandemic on Omani businesses and the wider economy.
It mandated, among other things, an income tax waiver for new businesses starting operations during a two-year timeframe from January 1, 2021 to December 30, 2022. However, the incentive is available only to businesses that advance the country’s economic diversification goals, it stressed.
In guidelines issued recently by the Tax Authority, clarifying applicability and eligibility criteria, officials noted that the newly launched businesses in question should be operating in one or more of the following sectors to qualify for income tax exemption: (1) Industry (as defined under the GCC’s Unified Industrial Regulation), (2) Tourism (operating hotels and tourist villages), (3) Logistics (significantly sized and value adding logistics activities endorsed by the Ministry of Transport, Communications and Information Technology), (4) Fisheries (fishing, processing, farming and aquaculture related), (5) Agriculture & Livestock Farming (farm production and processing, and related agro-industries, and (6) Mining (as defined under the Mining Law).
In an advisory on the Tax Authority’s latest guidelines, well-known professional services firm KPMG explained that the “exemption will be applicable only for companies established/registered in Oman in accordance with applicable laws and those that have Oman as their main centre for management or operation”.
KPMG further noted that the “exemptions are applicable only on income generated from the above-mentioned specified activities. Companies are not permitted to carry out any other activity apart from the above to claim such a tax exemption, it said, adding that, no company can have more than one tax exemption where it is subject to multiple tax exemptions laws and regulations.
To avail themselves of the waiver, eligible companies must formally write to the Tax Authority with supporting data and documents to demonstrate that they qualify for Income Tax exemption. The request shall be made before the end of the following tax year, the Tax Authority said.
