Corporate tax hike in Oman hurts listed firms’ first Q net profit

16/04/2017 07:02 AST

An increase in corporate income tax to 15 per cent, from 12 per cent has started hitting the net earnings of companies in the first quarter of this year.

Companies that have announced their financial results for the first quarter of 2017 said they have taken into consideration the revised tax rates. As many as 47 listed companies, including major banks, such as Bank Muscat, Bank Dhofar, National Bank of Oman, Bank Sohar and ahlibank, which are listed on the Muscat bourse, have announced financial results for the first quarter so far.

The increase in tax rate will have a negative impact on dividend distribution as well from this year. Withholding tax on dividends to non-residents might affect the distribution policy of power utilities as the majority shareholders of these companies are foreign non-resident entities.

Out of the OMR452 million collected as corporate income tax in 2015, 28.5 per cent was contributed by the Muscat Securities Market-listed companies.

In February, corporate income tax in Oman was increased from 12 per cent to 15 per cent and certain exemptions in Oman’s existing tax law were scrapped with effect from the tax assessment year 2017. The government has also cancelled the tax exemption limit for companies earning a net profit of below OMR30,000.

Taking into consideration the condition of the small enterprises, some tax provisions were introduced specifically for them. Simple procedures for tax declaration, audit, tax assessment and record keeping were also introduced. The amendment also included imposing a reduced tax rate of 3 per cent on the establishments that meet certain criteria stipulated by the government.

Times of Oman