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Oman - Taxation
Those who work in the private sector are expected to make contributions of 6.5% of their salary to the social security fund for benefits and old age pensions. These contributions are added to by employers at a rate of 9.5%. The employer will also contribute a further 1% for industrial illness and injury benefits schemes. Everyone who is between the ages of 15 and 59 is liable for these contributions if they are in permanent employment.
There are no forms to be completed and no returns to file with the Ministry of Finance. There are no other deductions from salaries unless the worker has signed up to a company pension scheme, but this is a private arrangement between the company and the employee.
There are no capital gains or inheritance taxes, as long as these are considered to be personal income rather than a business transaction. There are no property taxes to be paid and wealth tax is also non-existent. The taxation situation helps to make not only Oman, but the whole of the Gulf region attractive to expats, as they can earn a decent salary without all the deductions that they may have in their country of origin. This, coupled with a low cost of living, means that workers have more disposable income each month.
Oman has a number of tax treaties in place with other countries. This means that details of salaries earned in the country can be shared with other countries and it is possible that they may wish to impose taxes on their expat workers. This will depend a great deal on the country of origin. There are workers who go to the Gulf Region to earn large salaries and who choose to send the monies back home for their families. Large amounts of money being sent back can be considered income for the families and they may then be taxed on this. It is a good idea to check with the tax office in your home country to determine exactly what your position would be if you chose to send monies home, or if you returned home at the end of your residency in Oman with large amounts of money.
There are also some countries that may consider their nationals to still be residents even if they are living and working in Oman, in which case their earnings may be subject to taxation. It is important to know where you would stand in your home country with taxes before you go.
The low cost of living is helped by the lack of VAT on goods and services. However, there are a number of duties which are imposed on imported goods so some items may be considered to be expensive as a result of this.
Stamp duty is one of the few taxes which is applicable and is charged when purchasing real estate at a standard rate of 3% of the sale price. There are no variations depending upon property value and this applies to all property purchases made by individuals. However, this is unlikely to affect most expats as there are strict regulations on the purchase of property by foreign nationals, so most expat workers choose to rent a property rather than buy. The regulations are being relaxed, but there are still many restrictions in place which means that most people do not bother.
Oman’s taxation revenue comes mainly from corporate taxation and if you are running a business in the country your company is subject to taxation regardless of your own residency status. Companies are subject to all the taxes that do not apply to individuals such as capital gains, income and on dividends.
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