Oman Zakat Guide 2026

What is Zakat?

Zakat is an Islamic religious obligation requiring Muslims to contribute a portion of their wealth to charitable causes. In Oman, zakat on businesses is codified and administered by the Ministry of Awqaf and Religious Affairs. It applies specifically to Omani-owned companies at a rate of 2.5% on the company's capital (paid-up capital). Zakat is not a tax in the legal sense (it is a religious duty), but it is mandatory and enforced through a formal assessment and collection process.

Who Must Pay Zakat?

Zakat applies to:

• Omani nationals who own companies (LLCs, joint-stock companies, sole establishments)
• GCC nationals who own companies in Oman (treated similarly to Omani nationals)
• Omani individuals engaged in business activities (as sole proprietors with commercial registration)

Exempt: Expatriates, foreign-owned companies, non-commercial individuals, and companies in free zones (during the 30-year tax holiday period, though zakat may still apply to Omani shareholders).

Zakat Calculation: 2.5% on Capital

Zakat is calculated at 2.5% on the company's paid-up capital as at the end of the financial year. Some businesses with significant liquid assets (cash, receivables, inventory) may have zakat calculated on a broader asset base (net current assets approach). The Ministry of Awqaf and Religious Affairs issues annual guidelines on the calculation methodology. The zakat year is the Hijri (lunar) calendar year, but most companies align it with their financial year.

Example: An Omani-owned LLC with paid-up capital of OMR 500,000. Zakat: 2.5% × OMR 500,000 = OMR 12,500 per year. If the company also has OMR 200,000 in cash and OMR 300,000 in inventory, the ministry may assess zakat on net current assets (current assets minus current liabilities) rather than just capital, potentially increasing the zakat base.

Zakat vs Corporate Income Tax (CIT)

Zakat and CIT are separate obligations in Oman. Key differences:

• Basis: Zakat is on capital (or net current assets); CIT is on taxable profit
• Rate: Zakat 2.5%; CIT 15% (standard), 0% (SME), 55% (oil/gas)
• Payable to: Zakat — Ministry of Awqaf and Religious Affairs; CIT — Secretariat General of Taxation (Ministry of Finance)
• Deductibility: Zakat is NOT deductible for CIT purposes (paid out of post-tax profits)
• Applicability: Zakat only for Omani/GCC Muslim owners; CIT applies to all companies
• Non-payment: Zakat — religious and reputational consequences; CIT — legal penalties (fines, interest, legal action)

Zakat for Individuals

Individual Omani Muslims are also expected to pay personal zakat (zakat al-mal) on their personal wealth, but this is not formally assessed or collected by the government. Personal zakat is a private religious obligation calculated at 2.5% on savings, gold, silver, and investments held for one lunar year (hawl), above the nisab threshold (minimum wealth threshold, approximately OMR 500–600 equivalent in gold). The Omani government does not enforce personal zakat; it is left to individual conscience.

Filing and Payment

Zakat returns are filed annually with the Ministry of Awqaf and Religious Affairs. The filing deadline is 60 days after the end of the financial year. Payment can be made in instalments (quarterly). Non-filing or underpayment can result in a reassessment by the ministry and potential legal action. Zakat paid is a recognized expense in the company's books but, as noted, is not deductible for CIT.

Zakat in Free Zones

Companies in Oman's free zones (Sohar, Salalah, Duqm, Al Mazunah) benefit from a 0% CIT for 30 years. However, the zakat obligation for Omani-owned companies continues regardless of the free zone status. Zakat is a personal religious obligation of the Omani owner, not a corporate tax, and is not covered by the free zone tax holiday.