Muscat: An upward revision in corporate income tax and scrapping of tax concession for certain categories of corporate entities will help open up huge additional employment opportunities in both government and private sectors, said a leading audit professional.
“The existing administrative machinery is not sufficient to cater to the increased number of tax assessees. Further, the tax department may have to open up additional units throughout the length and breadth of the country,” said Davis Kallukaran, managing partner of Crowe Horwath Oman.
He said this is a good opportunity to employ additional Omani workforce, provided they are given adequate training in the relevant field.
In fact, the business entities that were exempted so far may have to employ accountants who are adequately trained. This will require training institutes to provide practical training. There is good opportunity for the accountants and auditing professionals.
Kallukaran also noted that the major implications will be for contracts. The tax changes are likely to increase the cost of contracts involving foreign service providers. The changes in the permanent establishment (PE) concepts and the fact that services are now included after the amendments in the withholding tax provisions will add to the cost of the contracts.
“This will also affect the investments by foreign entities in Oman since dividends and interest are also subject to tax.”
Regarding the implications of the new amendment, he said the withholding tax amendments will naturally increase the cost of contracts.
“Going forward, I am of the opinion that the number of businesses coming under the tax net will be huge. Every business may have to file its return before the due date, even if it is in losses, in order to carry forward these losses, Kallukaran said, adding, “This means all the commercial entities registered in Oman will fall under the net.”
Further, the foreign entities will be forced to up companies in Oman to avoid the withholding tax which is based on gross income.