New Income Tax Rules For Business Expenses From 2027

Before the issuance of Tax Authority Decision No. 180/2026, the deductibility of business expenses in Oman was governed by the general rules set out in Article 18 of the Executive Regulations of the Income Tax Law. Among other things, those rules require that an expense be genuine, relate to the taxpayer's business, be necessary to generate income, and be supported by appropriate documentation.

However, Decision No. 180/2026 introduces a new provision by inserting Article 18 bis into the Executive Regulations. The new rules will apply to tax years beginning on or after 1 January 2027.

What has changed under Article 18 bis?

The Decision does not replace the existing general rules for deducting business expenses. Instead, it introduces specific conditions for a particular category of expenses: those incurred by a taxpayer in complying with decisions issued by government entities or other public legal persons.

In addition to the existing general requirements, Article 18 bis provides that:

• the expense must be necessary for carrying on the business;
• the deduction must be approved by the President of the Tax Authority; and
• the expense must not result from a breach of any obligation, regardless of its source.

Why does this matter for businesses in Oman?

Businesses may incur significant costs in response to decisions issued by regulatory authorities, municipalities, or other public bodies. These may include expenses relating to technical requirements, safety measures, remedial works, or other compliance obligations imposed by a government authority.

In such cases, assessing whether these expenses are deductible may no longer be limited to the general rules in Article 18. Businesses may also need to consider whether the additional conditions introduced by Article 18 bis apply.

What should businesses consider?

Before preparing their income tax returns, businesses that incur this type of expenditure may wish to consider questions such as:

• Does the expense fall within the scope of Article 18 bis?
• Was the expense incurred to comply with a decision issued by a public authority, or did it arise as a result of a breach of an obligation?
• Could the nature of the expense require further assessment under the new rules?

Although the practical application of Article 18 bis will become clearer once it takes effect, Decision No. 180/2026 reflects a legislative move towards applying specific tax rules to this category of expenses. Businesses should therefore take the new requirements into account when reviewing expenses incurred in complying with decisions issued by public authorities and when preparing for tax years beginning on or after 1 January 2027.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.