Omans State Council approved the Economic Committees report on the 2015 budget on 16 December. It will be debated by the Shura Council before being approved.
Yahya bin Mahfouz Mundhiri, premier and chair of the council, commented that the government was evaluating ways to rationalise spending and increase the contribution of non-oil sectors to public revenues.
He highlighted corporate income tax law, government support for non-performing public companies, and the feasibility of some development projects as areas of study.
Companies in Oman pay 12 per cent income tax on profits above RO30,000 ($78,000) a year. Only about 3 per cent of companies pay tax due to low profits, tax breaks and tax evasion and avoidance.
Theyre just testing the waters, says a source in Omans financial services industry. They intend to get stricter on existing tax provisions and more aggressive with assessment and demanding documents to justify tax avoidance.
With oil falling to new lows below $60 a barrel, Oman is facing a fiscal deficit of more than 7 per cent of GDP in 2015, according to Moodys. The oil and gas sector contributes more than 50 per cent of Omans GDP and a high proportion of the state budget. The IMF predicted a breakeven price of $107.5 a barrel for Oman in 2015.
Standard & Poors (S&P) downgraded Omans outlook to negative in December as its oil receipts fall.