Oman income tax law amendments positive step: Deloitte

Muscat: Income tax amendments published this week in Oman have been commended by top auditing firm Deloitte.
In an analysis released by one of the ‘Big Four’ auditing firms in the world, Deloitte has praised the amendments made in the income tax law, which were made public in the Royal Gazette this week, stating it would help serve economic and social objectives of the Sultanate.
Major changes in the law include the removal of taxable income threshold, increasing tax rate by 3 per cent on all firms, cancelling exemptions in tax previously made to several sectors and expanding the withholding of tax base.
“The various amendments announced by the Government are expected to support the Government increasing its revenue and prioritising implementation of projects that serve economic and social objectives,” the report stated.
“The increased corporate tax rate would help enhance the overall tax image of the country. It is very positive. A 3 per cent increase is not harmful. There would be mechanisms in place that foreign investors don’t get burdened with double taxation,” Phinander Peri, director of Tax at Deloitte said.
The regulations have also placed special emphasis on protecting companies that qualify as small enterprises by taxing them only 3 per cent.
“The government has put a simplified annual tax filing method for companies that are small and adhere to certain criteria set out under law. They don’t have to maintain a full-fledged financial account, but instead have to maintain basic account which will help them to compute taxable income. They have to file a very simplified annual tax return so it would be easy for them. Although, right now companies are not paying taxes they are filing annual returns according to the law. It would be the same thing,” he explained.
The law also carries strict punishment for defaulters, either through heavy capital fines or jail terms, both of which were either not present, or were less strict in the previous law. According to the report, stricter penalties and fines will ensure adherence to compliance of rules and self-assessment by companies.
“I think there should be more compliance with the new amendments and the number of tax payers would probably go up considering the streamlining of the process,” Peri added.