Oman News Agency

 

PRAYER TIMES

 

Fajr 04:39 AM
Dhuhr 12:15 PM
Asr 03:42 PM
Magrib 06:29 PM
Isha 07:40 PM
EXCHANGE RATES
Last Updated Date
  Buy Cell
AED
EUR
INR
JPY
USD

Economic Stimulus Plan Based on Five Axes

    3360

Print

Muscat, 9 Mar (ONA) --- The Sultanate’s Economic Stimulus Plan (ESP) endorsed by the Council of Ministers today is based on five main axes, namely: (A) Incentives pertaining to taxes and fees; (B) Incentives to improve business and investment environment; (C) Incentives to boost small and medium enterprises; (D) Incentives for the labour market and employment; and (E) Banking Incentives aimed to enhance efforts to alleviate the impacts of Covid-19 pandemic on the national economy through a set of measures to support efforts of enhancing economic recovery, economic activities and attracting foreign investments.

This plan comes within the framework of procedures of the Fiscal Sustainability Plan (2020-2024), which aims at improving the financial position of the Sultanate, cut down the country’s general debt and ameliorate its global credit rating.

The Economic Stimulus Plan (EPS) targets the diversification of the national economy during the the 10th Five-Year Plan. In particular, it lays emphasis on the sectors of converting industries, agriculture and fisheries resources, mining and mineral products, in addition to service, cultural, logistics and educational activities and their supportive and complementary sectors.

 

(A)      Incentives pertaining to taxes and fees are stated in the Plan as follows:-

·      Taxes:

1.   Exemption from the Income Tax shall be granted to all firms that undertake their business activities within the Economic Diversification Sectors for five years, right from 1 January 2021 till the end of 2022, in accordance with the terms and conditions to be announced by the Tax Authority (with effect from the date of the firms’ registration in the Commercial Register).

2.   Exemption of hotel establishments from the Income Tax due for the two tax years of 2020 and 2021.

3.   Permission for the settlement of the due income tax and waiving of the additional income tax (for 2021) ensuing from the segmentation of taxpaying (paying by instalments).

4.   Deduction of 1% of the value of the due tax, to a maximum of RO 10,000 from the announced tax based on tax declaration for the next year. This applies to all those who adhere to the presentation of tax declaration and process due tax payments within the deadlines stated in the law.

5.   Continued suspension of the application of the Withholding Tax related to the distribution of dividends on shares and interests for five years with effect from 2020.

6.   Deferring of the loss incurred by firms and establishments, as of the year 2020, to the next year and deducting the same from taxable income in the year 2021 and the subsequent years till such a time that the loss is zeroed, without commitment to the period of five years stated in Article No. 71 of the Income Tax Law.

7.   Exemption from the Tourism Tax and the Municipality Tax payable by tourism establishments till the end of 2021.

8.   Postponement of settlement of the Tourism Tax and the Municipality Tax payable by tourism establishments till end of December 2021.

 

·      Fees:

1.   Discounting by 50% of environmental permit fees that are renewed in 2021, throughout the period of validity of the permits/licenses.

2.   Exemption from fines arising from expired environmental permits provided these are renewed within three months. These permits cover commercial and industrial activities that require environmental clearance from the Environment Authority.

3.   Discounting by 25% of the land lease value in the Special Economic Zone in Duqm and in industrial estates affiliated to the Public Establishment for Industrial Estates (Madayn). The discount applies for the period from January 2020 to the end of 2022.

4.   Implementation of the option of “Fixed Tariff” on loads for top-consumption subscribers (consuming 100,000 kilowatt/hour or more) who are subject to the Cost-Reflexive Tariff. 

 

(B)       Incentives for the improvement of business and investment environment are stated in the Plan as follows:-

1.   Permission to practice business and investment activities after a business person or investor obtains a preliminary license to engage in business—without having to wait for the final license—after presenting an undertaking to stick to the prescribed terms and criteria governing the selected type of business. The departments concerned will conduct the regular inspection and verification at any later date. The Ministry of Commerce, Industry and Investment Promotion will devise terms for the activity within one month of its date.

2.   Companies registered as per the Foreign Capital Investment Law will be treated in the same way as Omani-owned companies where it pertains to Commercial Register fees. This applies to the firms’ engagement in business in the Economic Diversification Sectors specified in 10th Five-Year Plan and its enabling sectors.

3.   Offering foreign investment companies—as soon as they are founded and automatically—three licenses for the recruitment of expatriate manpower as per the terms set when issuing the Commercial Register.

4.   The Ministry of Commerce, Industry and Investment Promotion will sign a service agreement for/with all strategic investment projects valued at more than RO 1 million. The agreement states the rights and duties of the parties (including fees and required Omanisation percentages) during the period of investment.

5.   Allowing companies to own land plots of 5,000 square metres or more and properties for practicing the licensed activities in accordance with enforced laws, as per endowment fees. Companies will be given three months to adjust their conditions. Exempted from this are the lands not allowed for investment by non-Omanis, stated below:

1. That the ownership of the lands and properties has to be within land areas suitable for the actual requirements for the licensed commercial activities.

2. That the companies’ ownership of land plots and properties is limited to purchase in residential-cum-commercial, and commercial, industrial and tourism uses.

3. That the companies utilize 50% of the purchased real estates for practicing the activities registered in the Commercial Register. It is allowed to lease or sell the balance of lands, with the exception of real estates purchased for tourism purposes and integrated commercial complexes.

4. Oman Development Bank’s approval for the preparation of a financing programme to enhance export products and Omani services in cooperation with the Ministry of Commerce, Industry and Investment Promotion and Oman Export Credit Guarantee Agency (Credit Oman).

 5. That the departments concerned shall, within one month from its date, re-schedule municipal fees related to commercial activities licenses through mergers in a manner that streamlines procedures and expedite their finalization.

 

 (C) Incentives for supporting small and medium enterprises are stated in the Plan as follows:-

1.   Cutting down by 15%-12% the rate of income tax in accordance with the classification set by the Public Authority for Small and Medium Enterprises Development and their counterparts from among establishments not registered at the Authority and those registered at the Ministry of Commerce, Industry and Investment Promotion—through the two tax years of 2020 and 2021.

2.   Continuation of postponement of premiums of loans of small and medium enterprises that are payable to Al Raffd Fund till the end of December 2021.

3.   The awarding of government procurement tenders shall be limited to a ceiling of RO 10,000 for small and medium enterprises whose owners are holders of Riyada Card. Exemptions can be offered by the Head of Unit if convincing reasons are furnished.

 

(D) – Incentives for the labour market and employment promotion are stated as follows:

1. The allocation of RO 20 million in the 2021 Budget for training job seekers and qualifying them to join the labour market.

2. Reduction of fees for expatriate manpower recruitment, renewal of licenses for them to practice professions as stated in the Second Article of the Ministerial Decision No. 12/2021 issued by the Minister of Labour. This applies to higher and medium strata jobs, technical jobs and specialized jobs specified in Clauses 1, 2 and 3 of the paragraph titled “First” and Section (3) of the paragraph titled “Second” about “specialist of information systems security and protection, specialist of geographic and electronic computer network information and commercial agent” as follows: 50% for establishments and companies achieving the required Omanisation percentage and 25% for the establishments and companies which have Omani manpower.

 (E) Banking incentives are stated as follows:

1.   Sustained enforcement of procedures on suspending laid-out citizens' loan payment till further notice, as well as citizens whose salaries are slashed by their employers/companies till the end of September 2021.

2.   Instructing all banks to continue to respond to applications for the postponement of premiums and interest fees by all crippled borrowers affected by the current circumstances. The postponement shall continue for a period of six months more till the end of September 2021, without prejudice to the credit rating.

3.   Credit incentive packages shall continue to be offered, including the lending ceilings, the facilitation of borrowing for affected and productive sectors, cutting down percentages of protective capital and other, to help banks, financing and finance leasing companies to shoulder their responsibilities in supporting economic recovery in the country and improving liquidity.

4.   The Central Bank of Oman shall work with commercial banks, financing and lease financing companies to re-schedule the loans to fit with new fiscal flows from borrowers to secure their ability of repaying and meeting their contractual obligations with financing establishments, in accordance with emerging economic developments, without imposing re-scheduling fees. 

--- Ends/AB/KH