Oman votes in favor of 3% corporate tax hike as oil price shocks

Oman’s Shura Council on Tuesday voted in favor of increasing corporate tax by three percent, as the country looks at ways to tide over the impact of sustained low oil prices, a report in the Times of Oman said.

The country’s income has fallen by more than 60 percent since June last year, when oil was selling above $100 per barrel.

“We have voted yes for a 3 percent increase in corporate income tax, removing the tax free ceiling of OMR 30,000 for companies and bringing all companies under taxation regardless their grade,” said Tawfiq Al Lawati, a member of Majlis Al Shura’s economy committee, in a quote by the newspaper.

Corporate income tax, which stands at 12 percent, will become 15 if ratified by the government.

The council also voted to increase taxes for petrochemical companies from 12 percent to 35 percent, and a hike from 12 percent to 55 percent for liquid natural gas (LNG) companies.

The proposal, Lawati said, was aimed at bringing the taxation for oil and gas industry-based companies on par with oil companies.

“We won’t be able to totally resolve the financial crunch faced by the oil price dip with these tax reforms. However, these are the only measures which can be adopted first with less impact on citizens,” the Shura member said.

Gulf Cooperation Council states have been considering various measures to offset the effects of oil price drop. Earlier this year, the United Arab Emirates removed fuel subsidies; and more recently, Saudi Arabia implemented a tax on undeveloped urban land.

The sultanate— along with Saudi Arabia— is expected to announce its budget for 2016 soon.