On 29 October 2026, Oman issued Royal Decree No. 101/2026, amending the Supplementary Tax Law on Constituent Entities of Multinational Groups introduced under Royal Decree No. 70/2024.
The amendments strengthen Oman’s Pillar Two legislative framework by introducing more detailed provisions on the scope of application, registration requirements, designated filing entities, tax return filing, payment obligations, record retention and penalties.
The law is relevant to multinational enterprise (MNE) groups with entities in Oman and incorporates elements of the global minimum tax framework developed under the OECD/G20 Inclusive Framework. Royal Decree No. 101/2026 entered into force on 2 November 2026, while specified amended provisions apply to Tax Years beginning on or after 1 January 2025.
A major change is the removal of the Income Inclusion Rule (IIR) charging mechanism from Oman’s Pillar Two regime, leaving the domestic minimum top-up tax as the principal charging mechanism.
Scope of the law
The law applies to Constituent Entities (CEs) of MNE Groups located in Oman where the annual consolidated revenue of the Group equals or exceeds EUR 750 million in the Consolidated Financial Statements of the Ultimate Parent Entity (UPE) for at least two of the four Financial Years immediately preceding the Financial Year under assessment.
Where a Financial Year is shorter or longer than 12 months, the EUR 750 million revenue threshold must be adjusted proportionately.
Certain entities are not regarded as CEs for the purposes of calculating and paying Top-Up Tax under the law. These include:
- government bodies
- international organisations
- non-profit organisations
- pension funds
- an investment fund where it is the UPE
- a real estate investment entity where it is the UPE
The Chairman of the Oman Tax Authority may also specifically declare other entities to be excluded.
However, the revenues of Excluded Entities are still taken into account when determining whether the Group meets the EUR 750 million revenue threshold, and information relating to those entities must be included in the Pillar Two Information Return.
Registration and the Designated Filing Entity
CEs of in-scope MNE Groups must apply for registration with the Oman Tax Authority within 120 days of becoming subject to Top-Up Tax under the law. The detailed procedures and forms for registration remain subject to the Executive Regulations (ER) to be issued by the Tax Authority.
As part of the registration process, the CE must appoint a Designated Filing Entity (DFE) and notify the Tax Authority of the appointment.
The DFE may be an Oman-based CE, Joint Venture (JV), JV subsidiary or Permanent Establishment (PE), subject to the applicable conditions. It is responsible for fulfilling key compliance obligations in Oman, including filing the Top-Up Tax Return and Pillar Two Information Return and settling the Top-Up Tax on behalf of the relevant MNE or JV Group.
Oman’s charging mechanism: the IIR is removed
The Top-Up Tax Law originally promulgated under Royal Decree No. 70/2024 contemplated both a domestic minimum top-up tax and an Income Inclusion Rule under Oman’s Pillar Two framework.
The amended legislation removes the IIR and retains the domestic minimum top-up tax as Oman’s charging mechanism.
Oman’s Domestic Minimum Top-Up Tax (DMTT) has received transitional qualified status under the OECD’s Central Record for purposes of the global minimum tax.
The removal of the IIR means Oman will no longer impose an IIR charge on Oman-based parent entities in respect of low-taxed profits of foreign subsidiaries under the Oman Top-Up Tax Law.
Many jurisdictions implementing Pillar Two have also introduced domestic minimum top-up taxes, which generally give the jurisdiction in which low-taxed profits arise the first opportunity to collect the relevant Top-Up Tax.
Oman’s DMTT applies to relevant CEs, GLoBE Joint Ventures and Permanent Establishments of in-scope MNE Groups, subject to the detailed provisions of the law and forthcoming Executive Regulations.
Return filing and tax payment
The DFE must submit the Top-Up Tax Return and Pillar Two Information Return for the relevant in-scope entities in Oman, together with the required accounts and supporting documents, within 15 months of the end of the reporting Financial Year.
The Top-Up Tax must also be paid by the applicable Top-Up Tax Return filing deadline.
Draft Executive Regulations previously circulated by the Tax Authority contemplated an extended 18-month filing period for the transitional year. However, the amended law itself provides for a 15-month deadline. The treatment of the transitional year should therefore be confirmed once the final Executive Regulations are issued.
If the DFE identifies an error or omission in an original return, it must electronically submit an Amended Return within 30 days of discovering the error or omission. An Amended Return may only be filed within three years of the original return filing date.
Key provisions on payment, penalties and disputes
Top-Up Tax must be paid by the Tax Return filing deadline. Late payment attracts an additional charge of 1% of the unpaid tax for each month or part of a month, subject to the Chairman’s ability to grant a full or partial exemption from the charge in accordance with the law.
Relevant accounts, records and supporting documentation must generally be retained for 10 years from the end of the relevant Financial Year.
The amended legislation also introduces a substantial enforcement and penalty framework.
- Serious offences: intentional tax evasion and intentional failure to register, file required returns or pay Top-Up Tax may result in imprisonment of between six months and three years, a fine of between OMR 5,000 and OMR 50,000, or both, subject to the specific conditions of the law.
- Repeat offences: enhanced penalties may apply where specified offences are repeated within the prescribed period.
- Record-keeping and information offences: intentional failure to retain required records, provide accurate information or comply with certain Tax Authority requirements may result in imprisonment of up to one month and/or a fine of up to OMR 2,000.
- Entity-level liability: where an offence is committed in the name or on behalf of an entity through fault, gross negligence, approval or concealment by responsible officers, fines of between OMR 50,000 and OMR 200,000 may apply, without prejudice to individual liability.
- Administrative penalties: administrative penalties are capped at the higher of 25% of the Top-Up Tax due for the relevant Tax Year or OMR 10,000.
The law also provides objection and grievance rights in relation to disputed Top-Up Tax assessments and other actions carrying tax implications.
Side-by-side regime and tax exemptions
International Pillar Two developments, including the Side-by-Side framework applicable from 2026, should be considered alongside Oman’s domestic rules when groups assess their overall Pillar Two position.
With Oman’s amended regime focused on the domestic minimum top-up tax rather than an IIR, entities located in Oman that fall within the scope of the legislation remain subject to Oman’s DMTT, including where the wider MNE Group is headquartered in another jurisdiction.
The law also provides that tax exemptions granted under other laws or Royal Decrees do not apply to Top-Up Tax imposed on CEs of MNE Groups unless the exemption expressly extends to that tax.
This is consistent with the operation of the GLoBE framework and is particularly relevant to entities benefiting from exemptions or incentives under Oman’s wider Corporate Income Tax, free zone or investment regimes.
Matters to be covered by the Executive Regulations
The Executive Regulations are expected to provide further detail on the practical application of Oman’s Top-Up Tax regime, including:
- Top-Up Tax calculation mechanics
- registration procedures and requirements
- Top-Up Tax Return and Pillar Two Information Return requirements
- safe harbours and exclusions
- the treatment of Permanent Establishments and Excluded Entities
- rules governing Designated Filing Entities
- transparent and hybrid entities
- Domestic Groups
- Joint Ventures
- Controlling Interests
The final Executive Regulations will also be important in confirming whether an extended 18-month filing period will apply for the transitional 2025 reporting year.
Open questions
The amended law creates an immediate practical issue for groups whose first in-scope Tax Year began on 1 January 2025. Applying the 120-day registration rule retrospectively would result in a registration date that had already passed before Royal Decree No. 101/2026 was published.
Further guidance will therefore be important on how the Tax Authority intends to administer registration for entities that were already within scope before the amended provisions were issued, including when the relevant electronic registration functionality becomes available.
A further question is whether a GloBE Information Return (GIR) filed by the wider MNE Group will satisfy Oman’s Pillar Two Information Return requirements and how information exchange arrangements will operate where the relevant jurisdiction does not have an applicable qualified competent authority agreement with Oman.
If overseas filing cannot be relied upon, groups will need clarity on whether equivalent information must be filed separately in Oman.
How BDO Oman can help
Navigating Oman’s evolving Pillar Two requirements can be complex. BDO Oman’s Pillar Two specialists can support businesses with:
- assessing whether entities fall within the scope of Oman’s Pillar Two provisions
- DMTT modelling and impact assessments
- analysing available safe harbours, exclusions and exemptions
- supporting registration of in-scope MNE entities
- assessing the interaction between Oman’s Top-Up Tax regime and existing tax positions or incentives
- ongoing annual compliance and advisory support
- calculating DMTT liabilities under the applicable provisions
- supporting Top-Up Tax payment requirements
- preparing the DMTT Return and applicable GIR notification or return requirements
Our experts have experience with Pillar Two impact assessments and compliance across multiple jurisdictions, including European markets and the Bahrain and Qatar Pillar Two regimes, which have applied from 2025.
Contact BDO Oman for support with DMTT scope and impact assessment, registration and Pillar Two compliance requirements.