Oman is one of the Middle Eastern countries with the high percentage of expats. Foreigners are mostly employed in oil & gas, construction and education centers. Effective in 2013, Oman is in the process of issuing rules to encourage the employment of local workforce and restrict the number of new foreign worker permits. Specifically, Oman plans to introduce quotas for expats and to determine a list of industries that should employ more local talent. Many Americans reside in Muscat, a capital of Oman. Many American expats Oman are green card holders that must be aware of green card taxes. The Sultanate of Oman does not levy taxes on personal income. However, American expats still have to file US expatriate tax returns if they meet US filing requirements.
We get multiple questions from American expats Oman. Should American expats Oman file US expatriate tax returns if they are not subject to a personal income tax in Oman? Do you offer US expat tax services to Americans working in Oman? The purpose of this guide is to provide an overview of the key issues.
Expatriate Tax Rules for American Expats Oman
American expats Oman must remember that US citizens and green card holders are subject to the worldwide taxation. Although, Oman does not levy personal income taxes, the USA requires American expats file US expatriate tax returns if they meet the filing requirements. Specifically, American expats must report the foreign earned income as well as any US income.
Expats Oman can take an advantage of IRC section 911 to minimize US expat tax liability.
- Foreign earned income exclusion. American expats Oman can exclude up to $101,300 in a tax year 2016 if they earned income while living in Oman and if they meet either the bona fide residence test or physical presence test.
- Foreign housing exclusion. Expats Oman can exclude or deduct certain foreign housing expenses like rent, utilities etc if they are eligible to claim the foreign income exclusion etc.
- Foreign tax credit. Since American expats in Oman are not subject to any personal income tax, they cannot take a foreign tax credit.
American expats in Oman with foreign financial assets over $10,000 at any time during the year may be required to file form TD F90-22.1. The FBAR must be received by June 30 and no extension is allowed.
Tax system – FAQ
I am an American expat in Oman. What should I know about income taxes in Oman when I file US expatriate tax returns?
Oman doesn’t have personal income taxes. Moreover, the country does not levy taxes on income from capital gains, wealth, death or property. This rule applies both to residents and non-residents. In addition, there is not VAT (value added tax) or sales tax.
Are there any additional taxes in Oman?
Oman introduced the worldwide taxation of at 12% on companies. The company is required to pay taxes on profits accruing overseas through a branch as well as overseas dividends and capital gains. The New Tax Law became effective for all accounting periods ending on or after January 1, 2010.
Does Oman have a tax treaty and social security agreement with the USA?
The country does not have either an income tax treaty or totalization agreement (social security agreement) with the USA.
This is a summary of some key overseas tax issues that American expats Oman should review before getting an employment and moving to this foreign country.
American expats with additional questions about US expatriate tax filing, FBAR, FATCA and other overseas tax issues, should seek help of an expat tax CPA that specializes in US taxes for expats. International tax experts at Artio Partners are pleased to assist with tax planning, tax preparation and corporate tax issues.