- The Income Tax Law was first issued in the Sultanate of Oman in 1971.
- In 1981, the Income Tax Law for Companies was issued by Royal Decree No 47/81 to replace the Income Tax Law of 1971. Income Tax Law for Companies contained fourteen chapters and four schedules. It is considered more organized than the previous Law for the details contained thereto as regarding incomes subject to tax, exemptions, methods of tax assessment, collection, etc. Many amendments have been added to the Law, the last one of which has been promulgated by Royal Decree No. 13/2004.
- In 1989, the Law of Profit Tax on Establishments was issued by Royal Decree No. 77/89 for the purpose of imposing tax on individual establishments owned by a natural person (whether Omani or non-Omani) but it had only been effectively implemented on Omani establishments in tax year 1994. At first, its application was restricted to commercial and industrial establishments but, as from 2001, professional establishments were added. The Law provides that provisions of the Income Tax Law on Companies shall apply where no particular provision is provided for in this Law. Many amendments have been made to the Law, the last one of which has been issued by Royal Decree No. 55/2003.
- It has been long time since the issue of the above two tax laws. In order to keep pace with financial, economic, trade and investment developments witnessed by the Sultanate in the past, keeping in mind especially that the Sultanate has concluded various economic agreements such as Free Trade Agreement and joined as a member of the World Trade Organization (WTO) and to remove any ambiguity that may occur due to existence of several tax laws as well as the amendments which were issued from time to time since 1981, the new Income Tax Law was promulgated by the Royal Decree No. 28/2009 to aid accomplishing such goals.
The new Income Tax Law consists of various tax benefits aimed at adopting a strategy capable of boosting the investment climate and the efforts for diversifying the national income resources in the country. The most important features of the New Law are:
- Adhere to the policy of foreign capital investment promotion.
- Parity of tax rates to Omani Establishments and companies and their foreign counterparts.
- Simplify tax procedures, especially for the small Omani Establishments and companies to reduce the tax burden thereupon.
- Provide clarity by issuing rules so as to limit the tax disputes.
- Identify the rights and obligations of both the tax authority and taxpayers in specific and clear manner.