Oman’s government will reportedly raise up to an additional OMR 250m ($649m) for public coffers following the approval of an increase in the country’s corporate tax rate last week.
At a joint session of the country’s State Council and consultative assembly Majlis Al Shura on Thursday, representatives voted to increase the country’s corporate tax rate from 12 per cent to 15 per cent.
The increase will mean the government can raise an additional OMR 125m ($324.6m) to OMR 250m a year, Shura member Tawfiq Al Lawati told Times of Oman.
He said an “army of officers” would help enforce collection of the tax, which is only paid by 4,000 of Oman’s 20,000 registered companies.
“The officials will do random checking to find the violators. Violators will be penalised in terms of non-renewal of contracts, issuance of job visas and all,” Al Lawati, who also heads a government panel on austerity measures, said.
By November last year the country had collected OMR 427.5m ($1.11bn) in corporation tax, a 4.5 per cent increase on 2014, according to the publication.
The 3 per cent increase was first approved by the Shura last December, along with the removal of a tax free ceiling of OMR 30,000 ($78,000) for companies, but the proposal was held back until last Thursday due to reservations from the State Council.
Majlis Al Shura economic and financial committee head Saleh bin Said Masan was quoted as saying small and medium enterprises with a capital investment of OMR 50,000 ($130,000) and turnover of OMR 100,000 ($260,000) would only have to pay 3 per cent tax if they met certain conditions related to Omanisation.
“Companies, which are not SMEs and having capital investment above OMR50,000 will have to pay 15 per cent tax,” he said.
Oman Chamber of Commerce and Industry member Haitham Al Mamari told Times of Oman companies may struggle with the increase in the short term but said the move would push them to become more professional.
A member from Oman Chamber of Commerce and Industry (OCCI) said that there will be an impact on the market but it will be short.
However, a Muscat-based investment advisor World Wide Business House managing director Dr Anchan C K said the measure would have an adverse affect on the economy in the long run.
“It’s the right time to raise level of confidence to enhance the business rather than making it stiffer and competitive,” he said.
Last Thursday Majlis Al Shura and the State Council also voted to impose taxes on petrochemical firms and increase taxation on liquefied natural gas companies to boost government coffers.
Oman is expected to post an OMR 3.3bn ($8.6bn) budget deficit this year due to lower oil revenues.
The country has unveiled subsidy cuts, reduced benefits for public sector workers and increased fees to make up for the shortfall, following an OMR 4.5bn ($14bn) deficit last year.
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