Ministerial Decision No. 1152/2/1/141/2026 – Executive Regulation of the Tourism Law

Oman has introduced a comprehensive new regulatory framework for the tourism sector through Ministerial Decision No. 1152/2/1/141/2026, issued by the Ministry of Heritage and Tourism.

The new Executive Regulation of the Tourism Law came into force on 17 April 2026 and replaces the previous Executive Regulation issued under Ministerial Decision No. 39/2016.

The reform is significant for hotels, travel agencies, tour operators, tourism investors, adventure tourism businesses, tourist guides, and companies operating in the business events sector.

1. A Comprehensive New Tourism Regulatory Framework

The new regulation restructures the licensing and compliance framework for tourism activities in Oman.

Among the principal regulated categories are:

• Tourist and hotel establishments;
• Travel and tourism offices;
• Tourist guides;
• Adventure tourism activities;
• High-art performance groups operating in hotels and restaurants; and
• Business tourism activities, including conferences, exhibitions and corporate incentive programmes.

The express recognition of adventure tourism and business tourism as regulated activities is particularly relevant as Oman continues to develop its tourism and events sectors.

2. Significant Change to Tourism Licensing

One of the most commercially important changes concerns the treatment of tourism licence applications.

Under the new framework, the Ministry generally has 60 days to determine an application. If the Ministry does not issue a decision within the prescribed period, the application may be deemed accepted, subject to satisfaction of the applicable regulatory requirements.

This represents an important change from the previous position and may provide greater certainty to tourism investors and operators.

For investors, licensing certainty can directly affect:

• project commencement;
• financing arrangements;
• lease commitments;
• construction schedules; and
• commercial opening dates.

3. Existing Tourism Establishments Should Review Compliance

The replacement of the previous regulatory framework means that existing tourism establishments should assess whether their current operations remain compliant with the new requirements.

Businesses should consider undertaking a regulatory review covering:

• existing tourism licences;
• permitted activities;
• establishment classification;
• premises and facilities;
• staffing arrangements;
• insurance;
• health, safety and security requirements;
• applicable tourism fees;
• service-charge arrangements; and
• advertising and operational practices.

The Ministry has also called on existing licensed hotel and tourism establishments to regularise their status under the new framework.

4. Adventure Tourism Is Now Specifically Regulated

The regulation introduces a dedicated licensing framework for adventure tourism.

This is particularly relevant to businesses involved in activities such as:

• off-road and desert tourism;
• mountain activities;
• trekking;
• canyoning;
• caving;
• ziplining; and
• other adventure activities.

Adventure-tourism operators face specific safety and risk-management obligations. These include appropriate licensing, security and safety requirements, insurance issued in Oman, specialist licensed guides, risk-management measures and safety plans.

Operators are also expected to consider weather conditions and suspend activities where conditions create safety concerns.

Practical implication

Adventure-tourism businesses should treat safety compliance as an ongoing operational obligation rather than merely a licensing requirement.

5. New Regulatory Framework for Tourist Guides

The regulation provides a more structured framework for tourist guides, including different categories such as:

• general tourist guides;
• location-specific guides; and
• specialised guides.

The framework also regulates matters such as group sizes, permitted activities and professional conduct.

Of particular importance to tourism operators employing expatriates, English-language tourist guiding remains subject to Omani nationality requirements.

Businesses should therefore review their guide recruitment and contracting arrangements.

6. Business Tourism Receives Formal Recognition

Another important development is the recognition of business tourism as a regulated tourism activity.

This encompasses activities connected with:

• conferences;
• exhibitions;
• corporate events; and
• incentive programmes.

The development is particularly relevant to Oman's growing MICE — Meetings, Incentives, Conferences and Exhibitions — sector.

Companies operating in this space should assess whether their activities require licensing or additional approvals under the new framework.

7. Tourism Fees and Service Charges

The regulation also addresses the financial obligations associated with tourism establishments.

According to published commentary on the new regulation, establishments continue to collect a 4% tourism fee for the Ministry and an 8% service charge. The new framework also provides for the service charge to be distributed to employees in cash.

Hotels and tourism establishments should therefore review:

• payroll procedures;
• accounting systems;
• customer invoices;
• employee policies; and
• service-charge distribution mechanisms.

This creates an important intersection between tourism regulation, employment compliance and financial controls.

8. Revised Licence Fees

The new regulation also revises various tourism-related fees.

For example, the reported licence fee for a five-star hotel is OMR 1,900 for three years, compared with the previous fee of OMR 3,200 for five years.

Investors and operators should therefore verify the applicable fee before submitting new applications or renewal requests.

9. Administrative Penalties

The regulation establishes an administrative penalty framework for violations, with administrative fines reported to be capped at OMR 6,000.

The financial exposure reinforces the importance of implementing internal compliance procedures and maintaining appropriate documentation.

10. What Should Tourism Businesses Do Now?

Tourism and hospitality businesses should consider taking the following steps:

Conduct a regulatory gap analysis

Compare existing licences, activities and operational practices against the new regulation.

Review licensing requirements

Confirm whether existing activities fall within a newly regulated category or require additional approvals.

Review employment arrangements

Particularly assess arrangements involving tourist guides, service charges and operational personnel.

Review safety and insurance

Adventure-tourism operators should give particular attention to risk assessments, insurance and emergency procedures.

Review contracts

Hotel management agreements, tourism operator agreements, supplier contracts and customer terms should be reviewed where the regulatory changes affect contractual obligations.

Update internal compliance procedures

Businesses should ensure that staff responsible for licensing, HR, finance and operations understand the new requirements.

Conclusion

Ministerial Decision No. 1152/2/1/141/2026 represents a significant restructuring of Oman's tourism regulatory framework.

The regulation goes beyond licensing and introduces more detailed requirements concerning tourism activities, adventure tourism, tourist guides, business tourism, safety, fees and administrative compliance.

For existing operators, the priority should be a regulatory gap assessment and status review. For new investors, the regulatory framework should be considered at the project-planning stage, before committing to significant leases, financing, construction or operational expenditure.

The new framework also presents opportunities for investors by providing greater regulatory clarity for emerging areas such as adventure and business tourism.

YLAW – Legal Perspective

Businesses operating in Oman's tourism and hospitality sector should approach the new regulation as an ongoing compliance framework rather than a one-time licensing requirement.

A structured legal review can help identify licensing gaps, operational risks, contractual issues and potential regulatory exposure before they develop into disputes or enforcement matters.

Younis Al Amri & Sayed Taher Advocates & Solicitors (YLAW) advises businesses and investors on regulatory compliance, corporate structuring, commercial contracts, employment matters, licensing and investment-related legal issues in Oman.

This article is intended for general information only and does not constitute legal advice. Businesses should obtain advice based on their specific activities, licences and regulatory circumstances.

Oman has taken another significant step towards digital tax administration with the introduction of Tax Authority Decision No. 189/2026, establishing the framework for mandatory electronic tax invoicing in the Sultanate.

The reform forms part of Oman's Fawtara electronic invoicing initiative and will progressively move VAT-registered businesses from conventional invoicing to a secure, structured electronic invoicing environment.

For businesses, the change is not simply about replacing paper invoices with electronic documents. It will affect VAT compliance, accounting systems, ERP platforms, invoice controls, data management, record retention and internal processes.

With mandatory implementation scheduled in 2027, businesses should begin preparing now.

1. What Is Oman Tax Authority Decision No. 189/2026?

Tax Authority Decision No. 189/2026 introduces amendments to the VAT regulatory framework relating to the issuance of tax invoices in electronic form.

The Decision provides the legal foundation for the transition towards mandatory electronic tax invoicing, complementing the Oman Tax Authority's Fawtara project.

The objective is to establish a more standardised and secure process for the generation, exchange, verification and storage of tax invoices.

The wider Fawtara initiative is intended to strengthen tax compliance, improve transaction transparency and facilitate more efficient tax administration.

2. What Is E-Invoicing in Oman?

Electronic invoicing, commonly referred to as e-invoicing, involves the creation, exchange and storage of tax invoices in a prescribed electronic format.

An important distinction should be made between an electronic invoice and an ordinary electronic document.

A PDF invoice sent by email, for example, is still essentially a digital representation of a conventional invoice. It does not necessarily satisfy the requirements of a structured electronic invoicing system.

Under Oman's Fawtara framework, electronic invoices are intended to be generated and exchanged in a standardised format capable of automated processing and verification.

3. Key Requirements for Electronic Tax Invoices

The new framework places greater emphasis on the security and integrity of tax-invoice information.

Businesses will need to ensure that their electronic tax invoices satisfy the applicable requirements concerning:

• Approved electronic format – invoices must be generated using the electronic format and technical specifications prescribed by the Tax Authority.
• Security – the invoicing process must protect invoice information against unauthorised alteration or manipulation.
• Integrity – the information contained in the invoice must remain reliable and complete.
• Unique identification – each invoice must be capable of being uniquely identified within the electronic invoicing framework.
• Electronic storage – invoices must be retained electronically in accordance with the applicable requirements.
• Verifiability – the system should allow invoices to be authenticated and verified through the prescribed electronic mechanism.

These requirements mean that businesses should assess the entire invoicing process rather than simply redesigning their invoice template.

4. Is a PDF Invoice an E-Invoice?

Not necessarily.

One of the most important practical points for businesses is that a conventional PDF invoice should not be assumed to constitute a compliant electronic tax invoice.

The Fawtara model is based on structured electronic data that can be processed and exchanged through the approved electronic infrastructure.

Accordingly, once mandatory e-invoicing applies to a taxpayer, simply generating a PDF from accounting software and emailing it to a customer may not satisfy the applicable requirements.

Businesses should therefore review whether their current accounting and ERP systems are capable of supporting the required e-invoicing functionality.

5. Who Will Be Required to Comply?

The electronic invoicing framework is being introduced progressively for businesses falling within the relevant VAT regime.

The OMR 5 million annual-supply threshold is particularly important because it determines the applicable mandatory implementation date.

Businesses should therefore establish their annual supply value and determine which implementation category applies to them.

The reform should not be viewed as affecting only large corporations. Businesses below the OMR 5 million threshold will also need to prepare for the subsequent implementation stage.

6. Mandatory E-Invoicing Deadlines

The mandatory implementation is divided into two principal stages:

Taxpayer category	Mandatory implementation
Annual supplies exceeding OMR 5 million	1 April 2027
Annual supplies OMR 5 million or less	1 October 2027

The first group therefore has the earlier compliance deadline.

Businesses should begin their implementation programme well before these dates because ERP integration, service-provider selection, testing, data cleansing and employee training may require considerable preparation.

7. What Is Fawtara?

Fawtara is the Oman Tax Authority's electronic invoicing initiative designed to establish a digital ecosystem for tax invoices.

The system is intended to facilitate the electronic creation, exchange, validation and reporting of invoice information.

The Fawtara framework connects the relevant parties in the invoicing chain and enables the Tax Authority to receive relevant tax information electronically.

The initiative forms part of Oman's wider digital transformation of tax administration.

8. Role of E-Invoicing Service Providers

Accredited e-invoicing service providers will play an important role in the Fawtara ecosystem.

Businesses may need to connect their accounting or ERP systems with an approved service provider capable of processing and exchanging electronic invoices in accordance with the Tax Authority's requirements.

When selecting a service provider, businesses should consider:

• technical compatibility;
• integration capabilities;
• information security;
• data protection;
• system availability;
• implementation support;
• scalability; and
• contractual liability for system failures.

The choice of service provider should therefore be treated as a legal, technological and commercial decision, rather than simply a software procurement exercise.

9. The Five-Corner Model

Oman's Fawtara framework is designed around a five-corner model involving:

1. Supplier – the business issuing the invoice.
2. Supplier's service provider – the accredited provider processing the invoice.
3. Buyer – the customer receiving the invoice.
4. Buyer's service provider – the provider processing the invoice for the recipient.
5. Oman Tax Authority – the regulatory authority receiving relevant tax information.

This model is intended to facilitate secure electronic exchange and improve the accuracy and efficiency of invoice reporting.

10. Impact on VAT Compliance

E-invoicing does not replace the underlying VAT obligations of a taxpayer.

Businesses will continue to be responsible for correctly determining matters such as:

• whether a supply is taxable;
• the applicable VAT rate;
• the taxable value;
• the time of supply;
• VAT identification details;
• credit and debit notes; and
• VAT return reporting.

The difference is that these tax obligations will increasingly be supported by an automated electronic invoicing environment.

Errors that may previously have remained within a paper-based process could therefore become more visible through electronic validation and reporting.

11. Impact on Accounting and ERP Systems

The introduction of mandatory e-invoicing will require many businesses to reassess their existing accounting infrastructure.

Businesses should determine whether their current systems can:

• generate compliant electronic invoices;
• capture all mandatory invoice information;
• communicate with the relevant service provider;
• receive electronic invoices;
• process credit and debit notes;
• maintain appropriate audit trails;
• securely store invoice data; and
• retrieve records when required.

Where existing systems are not compatible, businesses may need to upgrade their ERP or accounting platform or introduce an appropriate integration solution.

12. Data Accuracy Will Become More Important

Electronic invoicing increases the importance of accurate master data.

Businesses should review information relating to:

• customer names;
• commercial registration details;
• VAT registration numbers;
• supplier information;
• product and service classifications;
• tax treatment; and
• invoice values.

In an automated environment, inaccurate or incomplete information can result in validation failures, incorrect VAT reporting or delays in processing.

Data cleansing should therefore form part of every business's e-invoicing implementation plan.

13. Electronic Storage and Record Retention

The new framework also reinforces the importance of electronic invoice storage.

Businesses should ensure that their systems provide appropriate:

• electronic archiving;
• access controls;
• backup procedures;
• data security;
• audit trails; and
• retrieval mechanisms.

The ability to produce an invoice and its underlying electronic record during a tax inspection or audit will become increasingly important.

Businesses should also consider how electronic invoice records interact with their broader document-retention and information-security policies.

14. Implications for B2B Transactions

The impact is likely to be particularly significant for business-to-business transactions.

Electronic exchange can reduce manual invoice processing and improve the matching of invoices with purchase orders, goods receipts and payments.

Potential benefits include:

• faster invoice processing;
• improved VAT reconciliation;
• reduced manual errors;
• better accounts-receivable management;
• better accounts-payable controls; and
• improved auditability.

However, these benefits depend on the accuracy and reliability of the underlying systems and data.

15. What About B2C Transactions?

The operational treatment of business-to-consumer transactions may differ from B2B transactions depending on the applicable technical requirements and further Tax Authority guidance.

Businesses operating significant B2C activities should therefore monitor the Tax Authority's technical specifications and implementation guidance closely.

They should not assume that a process designed for B2B invoicing will automatically satisfy the requirements applicable to consumer transactions.

16. What Businesses Should Do Now

Businesses should begin preparing for e-invoicing well before their applicable deadline.

1. Determine the Applicable Deadline

Calculate the business's annual supply value and determine whether it falls above or below the OMR 5 million threshold.

2. Conduct a Compliance Gap Analysis

Compare existing invoicing processes with the new electronic invoicing requirements.

3. Assess ERP and Accounting Systems

Determine whether existing software can support the required electronic invoice format and integration.

4. Select an Appropriate Service Provider

Evaluate accredited providers based on technology, security, integration, support and contractual terms.

5. Cleanse Business Data

Review customer, supplier, VAT and transaction data for accuracy.

6. Test the System

Testing should cover the complete invoice lifecycle, including issuance, validation, transmission, receipt, correction, cancellation and storage.

7. Review Internal Controls

Establish clear responsibility for invoice creation, approval, correction and cancellation.

8. Train Relevant Personnel

Finance, accounting, tax, IT, sales and procurement teams should understand how the new system affects their functions.

17. Legal and Commercial Implications

The significance of electronic invoicing extends beyond tax administration.

Electronic invoices may become important evidence in:

• payment disputes;
• commercial litigation;
• tax audits;
• contractual claims;
• accounting investigations; and
• regulatory proceedings.

Businesses should therefore ensure that their electronic records are maintained in a manner that supports both tax compliance and evidentiary reliability.

Contracts with ERP providers, service providers and outsourced accounting companies should also be reviewed to determine whether responsibility for data security, system availability, errors and regulatory compliance is appropriately allocated.

18. Key Dates at a Glance

Date	Significance
9 August 2026	Decision No. 189/2026 issued
August 2026	Initial Fawtara pilot/readiness activity
1 April 2027	Mandatory e-invoicing for taxpayers exceeding OMR 5 million annual supplies
1 October 2027	Mandatory e-invoicing for taxpayers at or below OMR 5 million annual supplies

Businesses should monitor subsequent Tax Authority guidance for technical specifications, onboarding procedures and any further implementation instructions.

19. YLAW Perspective

Decision No. 189/2026 represents a significant development in Oman's tax-compliance landscape.

The transition to mandatory electronic invoicing will require businesses to coordinate tax, finance, accounting, IT, legal and compliance functions.

The most effective approach is to treat e-invoicing as a structured implementation project rather than a last-minute software upgrade.

Businesses should begin with:

Legal assessment → Tax gap analysis → System assessment → Service-provider selection → Data cleansing → Integration → Testing → Staff training → Go-live

Early preparation will help businesses minimise operational disruption and reduce the risk of non-compliance when the applicable mandatory deadline arrives.

Conclusion

Oman's transition to mandatory electronic tax invoicing marks an important stage in the digitalisation of the country's tax administration.

Tax Authority Decision No. 189/2026 provides the legal framework for the transition, while the Fawtara system provides the technological infrastructure through which electronic invoices will be processed.

For businesses, the immediate priority should be to understand their applicable deadline, assess their existing systems and begin preparing for integration.

With mandatory implementation beginning on 1 April 2027 for taxpayers exceeding the OMR 5 million annual-supply threshold and 1 October 2027 for taxpayers at or below that threshold, businesses should begin their readiness programmes without delay.

E-invoicing is not merely a change in invoice format. It is a fundamental change in the way businesses create, exchange, store and manage tax information in Oman.

Disclaimer: This article is intended for general information purposes only and does not constitute legal or tax advice. Businesses should review Decision No. 189/2026, the VAT Law and Executive Regulations, and the latest technical guidance issued by the Oman Tax Authority in determining their specific compliance obligations.

The Ministry of Labour’s continued emphasis on employers’ compliance with statutory employment entitlements highlights the importance of properly calculating and settling end-of-service benefits (EOSB) when an employment relationship comes to an end.

For employers operating in Oman, end-of-service gratuity remains an important statutory obligation, particularly during the transition towards the Savings/Provident Scheme under the Social Protection Law.

1. What does the Labour Law provide?

Under Article 61 of Royal Decree No. 53/2023 issuing the Labour Law, an employer must, upon termination of the employment relationship, pay an end-of-service benefit to a worker who is not covered by the Social Protection Law, at a rate of not less than one basic wage for each completed year of service.

Any fraction of a year is calculated proportionately. The employee’s last basic wage is used as the basis for calculating the benefit. Importantly, service that commenced before the current Labour Law came into force is also included when determining the employee’s qualifying period.

In practical terms:

EOSB = Last Basic Wage × Years of Qualifying Service

The calculation is based on the basic wage, rather than the employee’s total or gross remuneration.

2. Who is currently entitled?

The statutory gratuity under Article 61 applies to workers who are not beneficiaries of the Social Protection Law.

Employers should therefore assess each employee individually, taking into account:

• Nationality and applicable social protection coverage;
• Date of commencement of employment;
• Total qualifying service;
• Last basic wage;
• Applicable employment contract and company policies; and
• Whether the employee falls within the transitional arrangements for the Social Protection Fund’s Savings Scheme.

The Social Protection Fund has confirmed that the new savings system is intended to cover end-of-service benefits for non-Omani workers, replacing the employer-paid gratuity for the period covered by the scheme.

3. The transition to the Savings/Provident Scheme

The Social Protection Law introduced a defined-contribution Savings System for non-Omani workers.

Under Articles 135–138 of the Social Protection Law, the scheme is intended to replace employer-paid end-of-service gratuity for non-Omani workers for the period following commencement of the relevant contribution provisions.

However, service accrued before the commencement of the savings contributions remains subject to separate treatment. The employer must settle the earlier gratuity entitlement in accordance with the applicable Labour Law provisions, or may settle it through the Savings System or directly with the worker in accordance with the statutory framework.

The implementation is being phased. Current Social Protection Fund material identifies the mandatory provident arrangement for non-Omani workers as part of the phased rollout, while the latest ILO/Social Protection Fund summary places its implementation within the fourth year of the Social Protection Law's rollout.

Accordingly, employers should not assume that the future provident mechanism eliminates their present obligations in respect of accrued gratuity.

4. Employer-funded savings or supplementary schemes

Employers may have internal gratuity, savings or supplementary benefit arrangements.

Article 48 of the Labour Law recognizes certain employer savings programmes where the programme is approved in accordance with the applicable requirements and the employer's contribution is intended to discharge its statutory gratuity obligation.

Where the programme does not provide an amount equivalent to the employee's statutory entitlement, the employer may remain liable for the difference. Where the employee has personally contributed to such a programme, additional rights may arise under the applicable arrangement.

Employers should therefore review existing benefit schemes rather than assuming that an internal provision automatically satisfies the statutory obligation.

5. What happens when employment ends?

A proper final settlement should identify and calculate all outstanding employee entitlements, including, where applicable:

• End-of-service gratuity;
• Outstanding salary;
• Accrued leave entitlements;
• Contractual benefits and allowances;
• Any other statutory or contractual amounts due.

Employers should also maintain accurate employment records. The Labour Law requires employers to maintain employee files containing, among other matters, the employee’s commencement date, remuneration, leave records and termination details.

The Government’s current digital services also provide mechanisms for recording termination of service and accessing employment records and end-of-service documentation.

6. Key compliance risks for employers

Failure to properly calculate or settle end-of-service entitlements can result in:

• Employee complaints and labour disputes;
• Claims for unpaid statutory benefits;
• Additional financial exposure arising from incorrect calculations;
• Increased scrutiny during employment-related proceedings; and
• Reputational and employee-relations risks.

Employers should particularly avoid relying on outdated gratuity formulas or calculating benefits solely by reference to gross salary.

7. What should employers do now?

Employers in Oman should consider undertaking an EOSB compliance review covering their workforce.

Recommended actions:

1. Audit employee records
Verify joining dates, basic wages, contracts and periods of service.

2. Recalculate accrued gratuity
Identify potential EOSB liabilities using the applicable statutory methodology.

3. Separate historical and future liabilities
For non-Omani employees, distinguish gratuity accrued before the applicable Savings Scheme contribution period from benefits arising under the new system.

4. Review employment contracts and policies
Ensure contractual provisions do not inadvertently understate statutory entitlements.

5. Review internal savings schemes
Confirm whether any employer-funded scheme has the necessary approvals and provides benefits sufficient to satisfy statutory requirements.

6. Prepare for the Social Protection Fund transition
HR, finance and legal teams should monitor implementation requirements and ensure payroll and employee-record systems can accommodate the new framework.

Conclusion

Oman’s evolving employment and social protection framework requires employers to take a proactive rather than reactive approach to end-of-service obligations.

While the Social Protection Fund’s Savings/Provident Scheme represents a significant shift in the way end-of-service benefits for non-Omani workers will be funded, existing accrued rights and current Labour Law obligations remain important during the transition.

For employers, now is an appropriate time to audit gratuity liabilities, review employment documentation and prepare for the next stage of the Social Protection Law’s implementation.

YLAW Perspective:
A structured end-of-service audit can help employers identify historic liabilities, correct calculation practices and align HR and payroll systems with Oman’s evolving labour and social protection framework before disputes arise.

This article is intended for general information only and does not constitute legal advice. Specific employee entitlements should be assessed based on the applicable law, employment contract, employee status and relevant Social Protection Fund provisions.

Introduction

On 9 July 2026, the Ministry of Labour issued Ministerial Decision No. 284/2026, introducing a new regulatory framework governing labour unions in the Sultanate of Oman. The Decision repeals Ministerial Decision No. 500/2018 and establishes updated rules for the formation, governance, administration, and operation of labour unions, sectoral unions, and the General Federation of Oman Workers.

The reforms reflect Oman's continued efforts to strengthen labour relations, promote transparency, and align workplace practices with international labour standards while ensuring a balanced relationship between employers and employees.

For employers, the Decision introduces important compliance obligations that should be incorporated into existing HR policies and employment practices.

---

Key Objectives of the New Regulation

The new regulations are intended to modernise Oman's labour relations framework and provide greater clarity for both employers and employees. The principal objectives include:

Strengthening Employee Representation

The Decision reinforces employees' right to organise and collectively represent their interests through recognised labour unions, providing a clearer legal framework for workplace representation.

Promoting Good Governance

Labour unions are now subject to enhanced governance requirements designed to improve accountability, transparency, and effective internal administration.

Enhancing Legal Protection

The regulations introduce additional safeguards for elected union representatives, ensuring they can carry out their functions without undue interference.

Clarifying Employer Obligations

Employers are provided with clearer guidance regarding their legal responsibilities when interacting with recognised labour unions and their representatives.

---

Key Changes Introduced by Ministerial Decision No. 284/2026

1. New Framework for Establishing Labour Unions

The Decision sets out detailed procedures governing the establishment and registration of labour unions.

Key aspects include:

• Formation Procedures – The regulations establish a structured process for creating labour unions, ensuring that all legal requirements are met before recognition is granted.
• Registration Requirements – Specific documentation and approval procedures have been introduced to standardise the registration process and improve regulatory oversight.
• Election of Administrative Boards – Clear rules now govern the election of union leadership, helping to ensure democratic representation and transparency.
• Dissolution Procedures – The Decision also specifies the circumstances and procedures under which a labour union may be dissolved in accordance with the law.

These provisions create greater certainty for employees wishing to establish labour unions while providing a consistent regulatory framework for employers.

---

2. Stronger Governance Requirements

One of the most significant reforms is the introduction of enhanced governance standards for labour unions.

The regulations require unions to maintain sound administrative practices through:

• Transparent Management – Union activities and decision-making processes should be conducted openly and in accordance with the regulations.
• Democratic Elections – Administrative board members must be elected through prescribed procedures that promote fair representation.
• Proper Record Keeping – Labour unions are expected to maintain accurate records of meetings, resolutions, financial matters, and administrative activities.
• Financial Accountability – Enhanced financial governance measures promote responsible management of union resources and improve institutional integrity.

These governance requirements aim to strengthen confidence in labour unions while promoting responsible administration.

---

3. Enhanced Protection for Union Representatives

The Decision provides additional legal safeguards for elected union representatives.

Among the notable protections are:

• Protection Against Unfair Employment Actions – The regulations introduce mechanisms to help prevent adverse employment actions taken solely because of an employee's union role.
• Review Committee – A specialised committee has been established to examine alleged violations involving union representatives and review employment decisions affecting them.
• Restrictions on Workplace Transfers – Employers may not transfer elected union representatives away from the workplace serving as the union headquarters without their consent, helping preserve effective employee representation.

These protections are intended to promote constructive dialogue between employers and employee representatives.

---

4. Employer Compliance Obligations

Although the Decision primarily regulates labour unions, it also introduces practical obligations for employers.

Businesses should ensure they:

• Recognise Lawfully Established Labour Unions – Employers should engage appropriately with recognised labour unions operating within their organisation.
• Cooperate with Union Representatives – Legitimate communications and consultations with authorised representatives should be facilitated in accordance with the regulations.
• Avoid Interference – Employers should refrain from actions that may improperly restrict or interfere with lawful union activities.
• Review HR Practices – Internal disciplinary procedures, transfers, and workplace policies should be reviewed to ensure compliance with the new legal framework.

Failure to comply may increase the risk of employment disputes and regulatory scrutiny.

---

5. Transitional Arrangements

To ensure continuity, the Decision contains transitional provisions for existing labour unions.

These include:

• Continuation of Existing Administrative Boards – Administrative boards elected under the previous regulations may continue to serve for the remainder of their approved terms.
• Future Compliance – New elections, registrations, governance procedures, and administrative activities must comply with Ministerial Decision No. 284/2026.

This approach allows organisations sufficient time to transition to the updated regulatory framework without disrupting existing operations.

---

Practical Steps for Employers

Organisations should take proactive measures to prepare for the new regulatory requirements, including:

• Reviewing employment policies and employee handbooks.
• Updating HR procedures relating to employee representation.
• Training HR personnel and management on the new regulations.
• Reviewing disciplinary and transfer procedures involving union representatives.
• Seeking legal advice where existing workplace practices may require amendment.

Early compliance will help minimise legal risks and support effective employee relations.

---

Conclusion

Ministerial Decision No. 284/2026 represents an important milestone in the development of Oman's employment law framework. By strengthening governance, enhancing employee representation, and clarifying employer responsibilities, the regulations aim to promote a more transparent and balanced workplace environment.

Employers should view these changes as an opportunity to review internal employment practices and ensure that their organisations remain fully compliant with the evolving legal landscape.

---

How YLAW Can Assist

Younis Al Amri & Sayed Taher Advocates & Solicitors advises domestic and international businesses on all aspects of Omani employment and labour law, including:

• Employment law compliance
• HR policy reviews
• Employment contracts
• Employment dispute resolution
• Regulatory compliance audits

Our team works closely with employers to develop practical, commercially focused solutions that minimise legal risk while supporting effective workforce management.

 

The Oman Tax Authority has issued Decision No. 180/2026, introducing an important amendment to the Executive Regulation of the Income Tax Law. The Decision inserts a new Article 18 bis into the Executive Regulation, establishing specific conditions under which certain business expenses may qualify as deductible for income tax purposes. The amendments apply from the tax year commencing 1 January 2027. While the amendment is concise, its practical implications are significant for businesses operating in Oman, particularly those incurring costs as a result of directives or decisions issued by government authorities and public entities.

What Has Changed?

Decision No. 180/2026 introduces Article 18 bis to the Executive Regulation of the Income Tax Law. The new provision governs the deductibility of expenses incurred by taxpayers in complying with decisions issued by state administrative units and other public legal entities.

To qualify as a deductible expense, all of the following conditions must be satisfied.

1. The Expense Must Be Necessary for Carrying on the Business

The expenditure must be directly connected to the taxpayer's business activities and genuinely required for the operation of the business.

This requirement reinforces the principle that only legitimate business expenses—rather than optional or unrelated expenditures—should reduce taxable income.

2. The Deduction Must Be Approved by the Chairman of the Tax Authority

The Decision requires that the deduction be expressly authorised by the Chairman of the Tax Authority.

This introduces an additional regulatory safeguard and indicates that expenses falling within the scope of Article 18 bis are not automatically deductible merely because they were incurred.

Businesses should therefore maintain adequate documentation demonstrating the necessity and circumstances of the expenditure when seeking recognition of the deduction.

3. The Expense Must Not Arise from a Breach of Any Legal or Contractual Obligation

The Decision makes it clear that expenses resulting from a failure to comply with any obligation—regardless of whether the obligation arises under law, regulation, contract, or another legal source—will not qualify for deduction.

This provision reinforces the long-standing tax principle that taxpayers should not receive a tax benefit for costs arising from non-compliance or misconduct.

Repeal of Inconsistent Provisions

Decision No. 180/2026 also provides that any provisions inconsistent with the new amendment are repealed to the extent of the inconsistency, ensuring that Article 18 bis prevails over conflicting regulatory provisions.

Effective Date

The Decision was published in the Official Gazette and takes effect from the tax year beginning on 1 January 2027. Businesses should therefore assess their internal tax policies and accounting procedures in advance of the effective date.

Practical Implications for Businesses

The amendment serves as a reminder that taxpayers should:

• Maintain comprehensive records supporting the commercial necessity of expenses.
• Distinguish between compliance-related expenditures and costs arising from breaches of obligations.
• Evaluate whether expenses requiring recognition under Article 18 bis may necessitate approval from the Tax Authority.
• Review existing tax compliance procedures ahead of the 2027 tax year.

Conclusion

Although Decision No. 180/2026 introduces only a single new provision, it strengthens the regulatory framework governing deductible expenses and provides greater clarity on the treatment of costs incurred in complying with governmental directives.

Businesses should proactively review their tax governance frameworks to ensure that qualifying expenditures are appropriately documented and supported before claiming deductions under the amended Executive Regulation.