Sultan of Oman approves a new economic stimulus package

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هذه الصفحة متوفرة بهذه اللغة: العربية

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9 March 2021

Muscat (WAF)- Sultan of Oman, Haitham bin Tariq, approved a new package to stimulate the local economy in light of the continuing repercussions of the Covid-19 pandemic, which included suspending taxes, reducing fees and postponing loans for those who lost their jobs.

The Council of Ministers’ statement on Oman News Agency stated that the package includes exempting all companies with a core business in one of the targeted sectors for economic diversification in the current five-year plan from corporate income tax for five years. The decision is limited to companies established during the period from January 2021 to the end of 2022.

The government is also exempting hospitality establishments from the income tax due for 2020 and 2021. The package also allows them to pay previous dues in instalments without paying additional tax and exempts them from tourism tax and municipality tax that the government collects from tourism establishments until the end of 2021.

Oman will also continue to suspend withholding tax (WHT) on dividends and interest for five years. The WHT was suspended in May 2019 by directives from the late Sultan Qaboos bin Said for three years to end in May 2022.

The stimulus allows corporate to carry their losses to the following years and deducting them from the taxable income for the year 2021 and the following years until the losses are settled “without being restricted to the time period of five years” mentioned in Article 71 of the Income Tax Law.

In terms of fees, the government decided to reduce the fees for environmental licenses renewed in 2021 by 50% for the entire period of validity of the permit. And the exemption from fines resulting from expired environmental licenses provided that they are renewed within three months.

As part of the package, major electricity subscribers subject to the cost-reflective tariff system (CRT) have the option of a fixed tariff.

The package also stipulates a reduction in the rental value of lands in the Special Economic Zone of Duqm and the areas under the Public Establishment of Industrial Estates by 25%, starting from January 2021 until the end of 2022.

Regarding banking and financial facilities, the Sultan ordered the measures announced in March 2020 and extended in September 2020 to be continued. The Central Bank of Oman (CBO) announced these facilities and measures last year- they were due to expire this month.

Under the extension of these facilities and measures, loans of Omanis who lost their jobs will be postponed “until further notice”. And loans of those who suffered wages reduction can postpone paying the instalments until September 2021.

Banks and other financial institutions are also encouraged to expand their lending and allow more flexible measures to reschedule the debt.