Oman establishes International Financial Center: Summary of the tax framework

Subject

Summary

Activities covered in the IFC

The law allows two primary categories of activities to be carried out within the IFC.

1. Financial services: Regulated activities that require licensing from the IFC authorities, including:

a. Banking services (including Islamic banking)

b. Insurance services

c. Investment management

d. Asset management

e. Investment funds

f.  Capital markets activities

g. Asset management and brokerage related advisory

2. Ancillary services: Non‑financial support activities considered ancillary to financial services that also require licensing from the authorities of IFC, including:

a. Professional and advisory services supporting financial institutions

b. Operational support services

c.  Other business activities designated as ancillary to financial services

The law also allows IFC licensed establishments to conduct certain activities outside IFC boundaries while retaining IFC’s regulatory treatment.

Period of tax incentives

The law offers eligible businesses incentives for up to 50 years from the date the law enters into force. The activities eligible for and conditions applicable to availing these tax incentives are yet to be notified.

Income tax and personal income tax

For the purposes of income tax and personal income tax in Oman, the following are deemed exempt while computing the taxable income in a tax year:

1. Income earned by licensed establishments in IFC from activities designated eligible.

2. Income earned by non-resident legal persons from any transactions with IFC authorities or eligible IFC establishments related to:

a. Royalty

b. Research and development

c. Right to use computer software

d. Provision of services (including management)

e. Dividend

f.  Interest

3. Income earned by non-Omani individuals from their relationship with IFC authorities or eligible IFC establishments, including income earned outside Oman.

Value added tax

For the purposes of VAT in Oman, the IFC is deemed a special zone, potentially allowing certain supplies to qualify for zero‑rating and exemption, subject to specified conditions.

Additional tax incentives

The law allows for the granting of additional tax incentives and exemptions to eligible establishments within IFC, subject to specified conditions.

Administration and oversight

The law empowers IFC authorities to exercise necessary powers to ensure:

a. Compliance with tax obligations

a.  Implementation of tax incentives and exemptions as agreed with the Tax Authority

Judicial system

The law empowers the IFC to establish its own court system, including a primary court, court of appeal and any other courts necessary. These courts have jurisdiction over all civil, commercial and labor disputes relating to IFC, its authorities, establishments, and transactions within or through it.

The law also recognizes the dispute resolution tribunal as part of the IFC. This tribunal is mandated to provide alternate dispute resolution means like mediation and arbitration and support IFC courts.