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Oman expands its tax circle to cut down budget deficit

Oman expands its tax circle to cut down budget deficit

Muscat: Oman government has decided to take some strict actions for betterment of its economy and could be forced private sector to pay tax on their profits to balance its budget in the face of falling oil prices.

These were among the proposals discussed on here the other day, as the State Council met to study the draft general budget for 2015 which had been passed to them by the Majlis Al Shura.

The State Council approved the report of the Economic Committee on the draft state general budget.

After the meeting, described as ‘coming under exceptional circumstances’ due to the decline in oil prices, chairman of the State Council, Dr Yahya bin Mahfoudh Al Mantheri, issued a statement saying that citizens’ interests would not be compromised, and that the best mechanisms and alternatives would be studied to rationalise spending and increase the contribution of non-oil sector to the public revenues of the state.

“This would necessitate paying more attention to activation of the Corporate Income Tax Law on companies, rethink on the continued support to some of the nonperforming public companies, study and evaluation of government investments,” said the statement. He also indicated that the government could revisit projects it had not yet fully committed to and defer them until situation improves.

Tawfiq Al Lawati, a Majlis Al Shura member, explained that the government must exert more pressure on companies not paying the income tax.

“Even though there are almost 120,000 companies registered with the government, only about 4,000 companies actually pay the income tax,” said Al Lawati.

He added that 4,000 companies come under the big firms list.

He also said that the government must combat hidden trade which is affecting the budget.

Corporate income tax in Oman is 12 per cent for all companies, including foreign firms, which is globally the third lowest rate in the countries that actually charge the tax.