The Sultanate presents itself as a country capable of reconciling tradition and modernity, economic development, but also social progress, through careful management of the fundamental levers of the economy, which has made it possible to keep inflation under control despite an accommodating monetary policy aimed at promote growth. Member of the Customs Union of the Gulf Cooperation Council and of the WTO, its customs tariffs, except for some sensitive sectors, are very low. The country has not joined OPEC.
Thanks to its reforms, the Sultanate of Oman has been able to perfectly protect itself from the effects of the global economic crisis and the growth shown by the country is still today more or less than 5%. Oman’s GDP is over $80 billion, and annual GDP per capita is a little over $40,300 (€37,000).
However, today’s economic situation, while on the one hand it is still very flourishing, remains very tied to oil and its deposits which are unfortunately modest and certainly not inexhaustible. The government is perfectly aware of this situation and has taken the problem head-on by highlighting the development of the various sectors including tourism.
Main sectors of industry
The agricultural sector is practically non-existent and accounts for less than 2% of the country’s GDP. Agricultural activity consists of the production of fruits and vegetables, for example dates, bananas, lemons, potatoes, tomatoes, sorghum, wheat and coconuts. Instead Oman is forced to import a lot of meat, milk and rice. Fishing is fairly successful with exports of grouper, amberjack, tuna, sardines, shark, lobster and shrimp.
Oil is the mainstay of the Sultanate’s economy. It alone represents 80% of GDP. Faced with the inevitable depletion of oil fields, the country had to move towards the exploitation of gas and minerals such as copper, silver and gold.
Tourism is booming and the government is putting in place everything necessary for this sector to one day become the worthy successor to the oil sector. The priority is luxury tourism and if Oman is to continue seeing this number of tourists every year, the country will have to address the geopolitical problems of the region especially the danger posed by the Yemeni border.
Taxation for businesses in Oman
The tax system of Oman is based on the principle of world wide income whereby the income of resident subjects is taxed in Oman wherever it is produced, while for non-resident subjects the income is subject to taxation in the country only if it derives from a source in Oman. The concept of resident person is not defined by Omani tax law.
There are no personal income taxes in Oman. Therefore, income from employment is not taxable. However, in the context of the taxation of legal persons, the taxation of income deriving from sole proprietorships is foreseen. In fact, the following are taxable persons: a business or establishment exclusively owned by a natural person, resident or non-resident, who independently carries out a commercial, industrial or professional activity in the Sultanate; an Omani company (company established in the Sultanate, in accordance with the laws of Oman), a permanent establishment of a foreign legal person carrying on business activity in the Sultanate through a fixed place of business or through a dependent agent.
A foreign legal person, which provides consultancy services or other services in the Sultanate for a period or periods of not less than 90 days in total in any 12-month period, is also considered a permanent establishment.
Taxable income consists of profits and capital gains and is calculated by subtracting the exempt income and the amounts allowed as deductions from the gross income. As a basic rule, all expenses incurred wholly and solely for business purposes and which are incurred to generate the company’s gross income may be deducted provided they are reasonable in view of the services received.
Investing in Oman
Electricity, gas, steam and air conditioning (also from renewable sources)
Given the wide availability of wind and solar sources, Oman is also betting on the development of renewable energies, especially green hydrogen, with the intention of remaining an exporter of energy in the coming decades as well, although the project is in its embryonic stage. Emblematic of this commitment is the Second Green Hydrogen Summit (Muscat – 5 to 7 December 2022). Against this background, Oman’s increased sensitivity to environmental issues can also be noted, as evidenced by the high-level Omani participation in COP27 in Sharm el Sheikh, where Energy Minister Al Aufi participated with a delegation of 70 people, in a countertrend to previous meetings on the subject.
Water supply; sewerage, waste treatment and remediation activities
In the field of infrastructure upgrading, the sector of environmental reclamation, waste treatment and the development of technologies for water purification are gaining importance. New activities will concern the construction of the city of Duqm, located in the homonymous Special Economic Zone, which the Government aims to make a logistics hub on the coast of the Indian Ocean.
Products of agriculture, fishing and forestry
The fisheries sector is at the center of development policies for which the Government hopes to collaborate with international partners for aquaculture, the construction of fish processing plants, the transformation of the cold chain and logistics