ACCT4182
This document is prepared by Dr. Marwa Al Kalbani and authorized only for ACCT4182 students, College of
Economics & Political Science, SQU.
Deduction from the Gross Income and Carry Forward of Losses
Sources: Income Tax Law: articles 54-76
Executive Regulation: articles 18-60
Determination of Taxable Income
Taxable income is the net profit as per the audited financial statements to which additions/adjustments are
made for items of expenses which are either partly disallowed or fully disallowed as deductible expense, less
adjustments/deductions for items of income which are exempted from tax.
Net profit or loss (as per I/S)
+ TI not included in I/S
+ Nondeductible Expenses
- Exempted income
- Deductible Expenses
- Loss brought forward
= Taxable income or loss
Article (54): General rule:
All expenses incurred during each tax year shall be deducted to the extent that such expenses are
incurred wholly for the production of gross income for the company.
Where the expenses are not wholly incurred for the production of gross income, only so much as is
attributable to the purpose of the production of gross income shall be deducted.
The expenses incurred for the production of income shall not be deducted if such income is
exempted from tax under the
provisions of this Law or any other law.
Article (55):
In determining the taxable income of any tax year, the following expenses shall be deducted:
1. Expenses incurred before the commencement of business or registration, but only at the amount
and to the limits specified in this Law, on condition that the date of commencement of business or
the date of registration falls within the accounting period ending in that tax year (they are
deductible in the first year of commencement of operations).
2. Amounts paid during that tax year to fulfil the dues of the employees of the establishment, Omani
company or the permanent establishment by the aforementioned Labour Law or any other Laws.
3. Contribution paid by the taxpayer in that tax year - in its capacity as an employer - to the Public
Authority for Social Insurance by the provisions of the aforementioned Social Insurance Law.
4. Amounts paid during that tax year on contribution for the pension funds by the rules set up in the
Executive Regulations of this Law.
5. Any debts not falling within Article 66 of this Law if they are considered to have become bad debts
during that tax year by the conditions and rules set up in the Executive Regulations of the Law.
6. Amounts paid by the taxpayer, either as a cost of acquisition of any of the assets specified in
paragraph 4 of Article 37 of this Law, except the assets to which Chapter Three of this Part applies,
or as necessary expenses in case of disposal of these assets, provided that such disposal is made
within the accounting period ending in that tax year.
