Oman

Tax Guide

2010
FOREWORD

Foreword
For any business looking to set up in a new market, one of the critical deciding
factors will be the target country’s tax regime. What is the corporate tax rate? What
capital allowances can we benefit from? Are there double tax treaties? How will
foreign source income be taxed?

Since 1994, the PKF network of independent member firms, which is administered
by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to
provide businesses with the answers to these key tax questions. This handy reference
manual provides clients and professional practitioners with comprehensive international
tax and business information for over 100 countries throughout the world.

As you will appreciate, the production of the WWTG is a huge team effort and I would
like to thank all the member firms of the PKF network who gave up their time to
contribute the vital information on their country’s taxes that forms the heart of this
publication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKF
Witt Mares, and Rachel Yeo and Scott McKay, PKF Melbourne for co-ordinating and
checking the entries from within their regions.

This year’s WWTG is the largest ever reflecting both how the PKF network is growing
and the strength of the tax capability offered by member firms throughout the world.

I hope that you find that the combination of reference to the WWTG plus assistance
from your local PKF member firm will provide you with the advice you need to make
the right decisions for your international business.

Mark Pollock
PKF Perth
Chairman, International Tax Committee of the PKF network

PKF Worldwide Tax Guide 2010 I

 IMPORTANT DISCLAIMER

This publication should not be regarded as offering a complete explanation of the

taxation matters that are contained within this publication.
Disclaimer

This publication has been sold or distributed on the express terms and understanding
that the publishers and the authors are not responsible for the results of any actions
which are undertaken on the basis of the information which is contained within this
publication, nor for any error in, or omission from, this publication.

The publishers and the authors expressly disclaim all and any liability and
responsibility to any person, entity or corporation who acts or fails to act as a
consequence of any reliance upon the whole or any part of the contents of this
publication.

Accordingly no person, entity or corporation should act or rely upon any matter or
information as contained or implied within this publication without first obtaining
advice from an appropriately qualified professional person or firm of advisors, and
ensuring that such advice specifically relates to their particular circumstances.

PKF International is a network of legally independent member firms administered by

PKF International Limited (PKFI). Neither PKFI nor the member firms of the network
generally accept any responsibility or liability for the actions or inactions on the part
of any individual member firm or firms.

II PKF Worldwide Tax Guide 2010

 PREFACE

The PKF Worldwide Tax Guide 2010 (WWTG) has been prepared to provide an
overview of the taxation and business regulation regimes of over 100 of the world’s
most significant trading countries. In compiling this publication, member firms of the
PKF network have sought to base their summaries on information current as of 30
September 2009, while also noting imminent changes where necessary.

On a country-by-country basis, each summary addresses the major taxes applicable to

business; how taxable income is determined; sundry other related taxation and business
issues; and the country’s personal tax regime. The final section of each country
summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating
to the payment of dividends, interest, royalties and other related payments.
Preface

While the WWTG should not to be regarded as offering a complete explanation of

the taxation issues in each country, we hope readers will use the publication as their
first point of reference and then use the services of their local PKF member firm to
provide specific information and advice.

In addition to the printed version of the WWTG, individual country taxation guides are
available in PDF format which can be downloaded from the PKF website at www.pkf.com

Finally, PKF International Limited gladly welcomes any comments or thoughts readers
may wish to make in order to improve this publication for their needs. Please contact
Kevin F Reilly, PKF Witt Mares, 10304 Eaton Place, Suite 440, Fairfax, Virginia 22030,
USA by email to kreilly@pkfwittmares.com

PKF INTERNATIONAL LIMITED

APRIL 2010

©PKF INTERNATIONAL LIMITED

ALL RIGHTS RESERVED
USE APPROVED WITH ATTRIBUTION

VI PKF Worldwide Tax Guide 2010

ABOUT PKF INTERNATIONAL LIMITED

PKF International Limited (PKFI) administers a network of legally independent

firms. The PKF network is the 11th largest global accountancy network with over
240 legally independent member and correspondent firms which have a combined
annual turnover of $1.9 billion. Located in 125 countries, the member firms of the
PKF network share a commitment to providing clients with high quality, partner-led
services tailored to meet each client’s own specific requirements.

The membership base of the PKF network has grown steadily since it was formed
in 1969. Added to the sustained growth in the number of PKF member firms, this
solidity has provided the foundations for the global sharing of expertise, experience
and skills and the development of services that meet the evolving needs of all types
of client, from the individual to the multi-national corporation.

Services provided by member firms include:

Introduction
Assurance & Advisory
Insolvency – Corporate & Personal
Financial Planning
Taxation
Corporate Finance
Forensic Accounting
Management Consultancy
Hotel Consultancy
IT Consultancy

PKF member firms are organised into five geographical regions covering Africa; Latin
America and the Caribbean; Asia Pacific; Europe, the Middle East & India (EMEI); and
North America. Each region elects representatives to the board of PKF International
Limited, which administers the network. While the member firms remain separate and
independent, international tax, corporate finance, professional standards, audit, hotel
consultancy and business development committees also work together to improve
quality standards, develop initiatives and share knowledge across the network.

Please visit www.pkf.com for more information.

PKF Worldwide Tax Guide 2010 VII

 STRUCTURE OF COUNTRY DESCRIPTIONS

A. TAXES PAYABLE

FEDERAL TAXES AND LEVIES

COMPANY TAX
CAPITAL GAINS TAX
BRANCH PROFITS TAX
SALES TAX/VALUE ADDED TAX
FRINGE BENEFITS TAX
LOCAL TAXES
OTHER TAXES

B. DETERMINATION OF TAXABLE INCOME

CAPITAL ALLOWANCES
DEPRECIATION
STOCK/INVENTORY
CAPITAL GAINS AND LOSSES
DIVIDENDS
INTEREST DEDUCTIONS
Structure

LOSSES
FOREIGN SOURCED INCOME
INCENTIVES

C. FOREIGN TAX RELIEF

D. CORPORATE GROUPS

E. RELATED PARTY TRANSACTIONS

F. WITHHOLDING TAX

G. EXCHANGE CONTROL

H. PERSONAL TAX

I. TREATY AND NON-TREATY WITHHOLDING TAX RATES

VIII PKF Worldwide Tax Guide 2010

INTERNATIONAL TIME ZONES

AT 12 NOON, GREENWICH MEAN TIME, THE STANDARD TIME

ELSEWHERE IS:

A I
Angola . . . . . . . . . . . . . . . . . . . .1 pm India . . . . . . . . . . . . . . . . . . . 5.30 pm
Argentina . . . . . . . . . . . . . . . . . . 9 am Indonesia. . . . . . . . . . . . . . . . . . .7 pm
Australia - Ireland. . . . . . . . . . . . . . . . . . 12 noon
Melbourne . . . . . . . . . . . . .10 pm Israel. . . . . . . . . . . . . . . . . . . . . .2 pm
Sydney . . . . . . . . . . . . . . .10 pm Italy . . . . . . . . . . . . . . . . . . . . . .1 pm
Adelaide . . . . . . . . . . . . 9.30 pm
Perth. . . . . . . . . . . . . . . . . .8 pm J
Austria . . . . . . . . . . . . . . . . . . . .1 pm Jamaica . . . . . . . . . . . . . . . . . . . 7 am
Japan . . . . . . . . . . . . . . . . . . . . .9 pm
B Jersey. . . . . . . . . . . . . . . . . . 12 noon
Bahamas. . . . . . . . . . . . . . . . . . . 7 am Jordan . . . . . . . . . . . . . . . . . . . .2 pm
Bahrain . . . . . . . . . . . . . . . . . . . .3 pm
Barbados. . . . . . . . . . . . . . . . . . . 8 am K
Belgium. . . . . . . . . . . . . . . . . . . .1 pm Kazakhstan . . . . . . . . . . . . . . . . .5 pm
Belize . . . . . . . . . . . . . . . . . . . . . 6 am Kenya . . . . . . . . . . . . . . . . . . . . .3 pm
Bermuda . . . . . . . . . . . . . . . . . . . 8 am Korea . . . . . . . . . . . . . . . . . . . . .9 pm
Bolivia . . . . . . . . . . . . . . . . . . . . . 8 am Kuwait. . . . . . . . . . . . . . . . . . . . .3 pm
Botswana . . . . . . . . . . . . . . . . . .2 pm

Time Zones
Brazil. . . . . . . . . . . . . . . . . . . . . . 7 am L
Brunei . . . . . . . . . . . . . . . . . . . . .8 pm Latvia . . . . . . . . . . . . . . . . . . . . .2 pm
Bulgaria. . . . . . . . . . . . . . . . . . . .2 pm Lebanon . . . . . . . . . . . . . . . . . . .2 pm
Leeward Islands
C (Nevis, Antigua, St Kitts) . . . . 8 am
Cameroon . . . . . . . . . . . . . . . . . .1 pm Libya. . . . . . . . . . . . . . . . . . . . . .2 pm
Canada - Liberia. . . . . . . . . . . . . . . . . . 12 noon
Toronto . . . . . . . . . . . . . . . . 7 am Lithuania . . . . . . . . . . . . . . . . . . .2 pm
Winnipeg. . . . . . . . . . . . . . . 6 am Luxembourg . . . . . . . . . . . . . . . .1 pm
Calgary . . . . . . . . . . . . . . . . 5 am
Vancouver . . . . . . . . . . . . . . 4 am M
Cayman Islands . . . . . . . . . . . . . . 7 am Malaysia . . . . . . . . . . . . . . . . . . .8 pm
Chile . . . . . . . . . . . . . . . . . . . . . . 8 am Malta . . . . . . . . . . . . . . . . . . . . .1 pm
China - Beijing. . . . . . . . . . . . . .10 pm Mauritius. . . . . . . . . . . . . . . . . . .4 pm
Colombia. . . . . . . . . . . . . . . . . . . 7 am Mexico . . . . . . . . . . . . . . . . . . . . 6 am
Costa Rica. . . . . . . . . . . . . . . . . . 6 am Morocco . . . . . . . . . . . . . . . . 12 noon
Croatia . . . . . . . . . . . . . . . . . . . .1 pm
Cyprus . . . . . . . . . . . . . . . . . . . .2 pm N
Czech Republic . . . . . . . . . . . . . .1 pm Namibia. . . . . . . . . . . . . . . . . . . .2 pm
Netherlands (The). . . . . . . . . . . . .1 pm
D Netherlands Antilles . . . . . . . . . . . 8 am
Denmark . . . . . . . . . . . . . . . . . . .1 pm New Zealand . . . . . . . . . . .12 midnight
Dominican Republic . . . . . . . . . . . 7 am Nigeria . . . . . . . . . . . . . . . . . . . .1 pm
Norway . . . . . . . . . . . . . . . . . . . .1 pm
E
Ecuador. . . . . . . . . . . . . . . . . . . . 7 am O
Egypt . . . . . . . . . . . . . . . . . . . . .2 pm Oman . . . . . . . . . . . . . . . . . . . . .4 pm
El Salvador . . . . . . . . . . . . . . . . . 6 am
Estonia . . . . . . . . . . . . . . . . . . . .2 pm P
Panama. . . . . . . . . . . . . . . . . . . . 7 am
F Papua New Guinea. . . . . . . . . . .10 pm
Fiji . . . . . . . . . . . . . . . . .12 midnight Peru . . . . . . . . . . . . . . . . . . . . . . 7 am
Finland . . . . . . . . . . . . . . . . . . . .2 pm Philippines. . . . . . . . . . . . . . . . . .8 pm
France. . . . . . . . . . . . . . . . . . . . .1 pm Poland. . . . . . . . . . . . . . . . . . . . .1 pm
Portugal . . . . . . . . . . . . . . . . . . .1 pm
G Puerto Rico . . . . . . . . . . . . . . . . . 8 am
Gambia (The). . . . . . . . . . . . . 12 noon
Germany . . . . . . . . . . . . . . . . . . .1 pm Q
Ghana . . . . . . . . . . . . . . . . . . 12 noon Qatar. . . . . . . . . . . . . . . . . . . . . . 8 am
Greece . . . . . . . . . . . . . . . . . . . .2 pm Romania . . . . . . . . . . . . . . . . . . .2 pm
Grenada . . . . . . . . . . . . . . . . . . . 8 am Russia -
Guatemala. . . . . . . . . . . . . . . . . . 6 am Moscow/St Petersburg . . . . .3 pm
Guernsey. . . . . . . . . . . . . . . . 12 noon
Guyana . . . . . . . . . . . . . . . . . . . . 8 am S
Sierra Leone . . . . . . . . . . . . . 12 noon
H Singapore . . . . . . . . . . . . . . . . . .7 pm
Hong Kong . . . . . . . . . . . . . . . . .8 pm Slovak Republic . . . . . . . . . . . . . .1 pm
Hungary . . . . . . . . . . . . . . . . . . .1 pm South Africa. . . . . . . . . . . . . . . . .2 pm

PKF Worldwide Tax Guide 2010 IX

 Spain . . . . . . . . . . . . . . . . . . . . .1 pm
Swaziland . . . . . . . . . . . . . . . . . .2 pm
Sweden. . . . . . . . . . . . . . . . . . . .1 pm
Switzerland . . . . . . . . . . . . . . . . .1 pm

T
Taiwan . . . . . . . . . . . . . . . . . . . .8 pm
Tanzania . . . . . . . . . . . . . . . . . . .3 pm
Thailand . . . . . . . . . . . . . . . . . . .7 pm
Trinidad and Tobago . . . . . . . . . . . 8 am
Turkey . . . . . . . . . . . . . . . . . . . . .2 pm
Turks and Caicos Islands . . . . . . . 7 am

U
Uganda . . . . . . . . . . . . . . . . . . . .2 pm
Ukraine . . . . . . . . . . . . . . . . . . . .2 pm
United Arab Emirates . . . . . . . . . .4 pm
United Kingdom . . . . . . .(GMT) 12 noon
United States of America -
New York City. . . . . . . . . . . . 7 am
Washington, D.C. . . . . . . . . . 7 am
Chicago. . . . . . . . . . . . . . . . 6 am
Houston. . . . . . . . . . . . . . . . 6 am
Denver . . . . . . . . . . . . . . . . 5 am
Time Zones

Los Angeles. . . . . . . . . . . . . 4 am
San Francisco . . . . . . . . . . . 4 am
Uruguay . . . . . . . . . . . . . . . . . . . 9 am

V
Vanuatu. . . . . . . . . . . . . . . . . . .11 pm
Venezuela . . . . . . . . . . . . . . . . . . 8 am
Vietnam

Z
Zambia . . . . . . . . . . . . . . . . . . . .2 pm

X PKF Worldwide Tax Guide 2010

 Oman

OMAN

Currency: Rial Omani Dial Code To: 968 Dial Code Out: 00
(RO)

Member Firm:
City: Name: Contact Information:
Muscat Percy Bhaya 24563 195
rsmcomct@omantel.net.om

A. TAXES PAYABLE

FEDERAL TAXES AND LEVIES

COMPANY TAX
For the tax year ending up to 31 December 2009, net taxable assessed income is
subject to the following tax rate structure.
(1A) Entities wholly owned by Omanis or where Omani shareholding in the capital of
a company is 51% or more (revised from tax year 2001 to entities wholly owned
by Omanis and mixed ownership companies of which 70% or less than 70%
capital is owned by foreigners and further revised to 100% foreign ownership
for all Omani establishments from the year 2003):
s THE lRST 2/ OF THE TAXABLE INCOME IS EXEMPT
s TAXABLE INCOME OVER 2/  IS TAXED AT A mAT RATE OF 
s A TAX RATE OF  WILL BE APPLICABLE TO 'ENERAL *OINT 3TOCK #OMPANIES
irrespective of the extent of foreign shareholding
s INCOME EARNED BY JOINT INVESTMENT ACCOUNTSMUTUAL FUNDS REGISTERED IN /MAN
UNDER THE #APITAL -ARKET ,AWS OR ESTABLISHED OVERSEAS FOR DEALING IN SHARES
AND SECURITIES LISTED ON -USCAT 3ECURITIES -ARKET IS EXEMPTED FROM TAX
s ANY ESTABLISHMENT REGISTERED IN /MAN BY '## CITIZENS IRRESPECTIVE OF THE
fact whether they carry out permitted activity or not and irrespective of
their percentage of capital contribution will have the applicable tax rate as
SPECIlED ABOVE FOR ALL /MANI ESTABLISHMENTS
(1B) The same tax rate as mentioned above continues for the tax year ending after
31 December 2009:
s &IRST 2/  OF TAXABLE INCOME OF THE COMPANY IS TAX FREE
s "ALANCE TAXABLE INCOME OVER 2/ IS TAXED AT A mAT RATE OF 
(2A) For the tax year ending up to 31 December 2009, The applicable tax rates for a
branch of a foreign company from tax year 2001 is as follows:

Taxable/assessed income (RO) Tax rate

0 to 5,000 0%
5,000 to 18,000 5%
18,000 to 35,000 10%
35,000 to 55,000 15%
55,000 to 75,000 20%
75,000 to 100,000 25% O
Over 100,000 30%
The entire taxable income is taxed at the percentage rate corresponding to the
INCOME BRACKET INTO WHICH THE TOTAL INCOME FALLS 4HE COMPANY IS HOWEVER SUBJECT
TO A RELIEF WHERE THE TAXABLE PROlTS FALL MARGINALLY INTO A HIGHER BRACKET )N THIS CASE
the tax payable is calculated as above and is then compared with the sum of the
TAX PAYABLE ON THE HIGHEST LIMIT OF THE BRACKET JUST BELOW THAT INTO WHICH THE TAXABLE
income falls and the amount of the marginal income in excess of the aforesaid limit.
The lower of these two amounts is the tax payable.
(2B) For Tax year ending after 31st December, 2009, branches of foreign
companies or income earned by a PE in Oman of a foreign company will be
taxed as under:
s &IRST 2/ OF TAXABLE INCOME OF THE COMPANY IS TAX FREE
s "ALANCE OF TAXABLE INCOME OVER 2/  IS TAXED AT A mAT RATE OF 

PETROLEUM COMPANIES
3PECIAL PROVISIONS ARE APPLICABLE TO TAXATION OF INCOME DERIVED FROM SALE OF
PETROLEUM 4HE TAX RATE IS  SINCE  /MAN ,.' #OMPANY ,,# IS SUBJECT TO
A SPECIAL TAX RATE OF  AS PER PROVISIONS OF 2OYAL $ECREE .O 

TAX EXEMPTIONS
#OMPANIES CARRYING OUT THE FOLLOWING SPECIlED ACTIVITIES WILL BE EXEMPTED FROM TAX
ONLY TO THE EXTENT OF THE INCOME ARISING FROM THE SPECIlED ACTIVITIES

PKF Worldwide Tax Guide 2010 1

 Oman

s INDUSTRY IN ACCORDANCE WITH THE ,AW OF /RGANISING AND %NCOURAGING )NDUSTRY

and Mining
s EXPORTATION OF LOCALLY MANUFACTURED OR PROCESSED PRODUCTS
s PROMOTION OF TOURISM WHICH MAY INCLUDE SETTING UP AND OPERATION OF TOURIST
hotels and villages with the exception of management contracts
s DAIRY FARM PRODUCTS AND PROCESSING OF THE SAME WHICH MAY INCLUDE LIVESTOCK
BREEDING PROCESSING OR MANUFACTURE OF LIVESTOCK PRODUCTS AND AGRICULTURAL
industries
s lSHING AND lSH PROCESSING
s EDUCATIONAL INSTITUTIONS AND PRIVATE HOSPITALS

The exemption from tax for companies engaged in the above activities will be
OPERATIVE FOR A PERIOD OF lVE YEARS EFFECTIVE FROM THE DATE THAT ACTIVITY OR PRODUCTION
activity commences. The period of exemption may be further extended for a period
NOT EXCEEDING lVE YEARS PROVIDED THAT A DECISION IS ISSUED TO THAT EFFECT BY THE
Financial Affairs and Energy Resources Council. Companies engaged in the above
ACTIVITIES ARE ALLOWED TO CARRY FORWARD THEIR LOSSES INDElNITELY BEYOND THE EXEMPTED
PERIOD OF lVE YEARS AND DEDUCT IT IN SUBSEQUENT YEARS UNTIL LOSSES ARE FULLY ABSORBED

TAX YEAR
The tax year is the calendar year although a special permit can be obtained from the
-INISTRY OF &INANCE FOR A DIFFERENT lSCAL PERIOD

PROVISIONAL AND ANNUAL RETURNS OF INCOME

0ROVISIONAL TAX IS TO BE PAID AND PROVISIONAL RETURN OF INCOME IS TO BE lLED WITHIN THREE
months of the end of the accounting period.

Annual return and annual tax settlement is due at the end of six months following
THE CLOSE OF ACCOUNTING PERIOD 4HE SAME SHOULD BE lLED ALONG WITH THE AUDITED
accounts.

CAPITAL GAINS TAX

Capital gains are normally regarded as part of ordinary corporate income and the
TOTAL INCOME IS TAXED AT APPLICABLE TAX RATES 7ITH EFFECT FROM  *ANUARY  PROlT
MADE ON SALE OF SECURITIES LISTED ON -USCAT 3ECURITIES -ARKET IS EXEMPT FROM TAX
Also the loss, if any, will not be allowed as a deductible expense.

BRANCH PROFITS TAX

Branches of foreign companies are taxed in Oman if PE of a foreign company is
ESTABLISHED IN /MAN !LLOWANCE FOR ALLOCATED HEAD OFlCE EXPENDITURE IS ON RESTRICTED
basis.

OTHER TAXES
Consumption taxes include the following:

Rate
/N ANNUAL RENTAL OF LEASED PREMISES AND CINEMA TICKETS 3%
O %LECTRICITY BILLS IN EXCESS OF 2/  2%
Hotels and restaurant bills 5%

-UNICIPAL TAXES ARE PAYABLE IN THE -USCAT AND 3ALALAH MUNICIPALITIES 4HE TAXES
charged in the Muscat municipality are as follows:

Rate
Hotel income 5%
Property rents 3%
,EISURE AND CINEMA INCOME 10%
Tax on home owners using the drainage system 10%

VOCATIONAL TRAINING LEVY

-INISTERIAL $ECISION  SPECIlES THE VOCATIONAL TRAINING LEVY ON EMPLOYERS
AT 0RIVATE 3ECTOR AT 2  ANNUALLY PER EXPATRIATE EMPLOYEE 4HE DECISION IS
effective from 8 March 1998.

SOCIAL SECURITY PREMIUM

%MPLOYERS ARE REQUIRED TO PAY A SOCIAL SECURITY PREMIUM EQUAL TO  OF THE SALARIES
of its Omani employees. Of this amount, 6.5% is recoverable from the Omani
employees.

2 PKF Worldwide Tax Guide 2010

 Oman

CUSTOMS DUTIES
Customs duties are levied on certain categories of imported goods. The rates range
from 5% to 100%.

B. DETERMINATION OF TAXABLE INCOME

Taxable income is computed in accordance with the generally accepted accounting

principles applied on a consistent and regular basis. The accrual basis is generally
to be used although, in special cases, the Director of Income Tax may approve cash
basis of accounting.

As a basic rule, all expenses which are incurred wholly and exclusively for the
purposes of business and are incurred to generate the gross income of the
establishment are allowed to be deducted provided they are reasonable considering
value of services received. Any expense or cost incurred to generate income which is
exempted from income tax will not be allowed as a deductible expense.

2EMUNERATION TO WORKING PARTNERS AND OWNERS FAMILY MEMBERS IS ALLOWED ON

restricted basis.

#ERTAIN CHARGES HAVE BEEN SPECIlED AS NOT DEDUCTIBLE AND CERTAIN CHARGES HAVE
BEEN RESTRICTED TO SPECIlC AMOUNTS BY THE TAX LAW

DEPRECIATION AND AMORTISATION

For Tax year ending up to 31 December 2009

$EPRECIATION IS DEDUCTIBLE ON THE BASIS OF STRAIGHT LINE METHOD AT RATES PRESCRIBED BELOW

Assets Rate
Permanent buildings 4%
Prefabricated buildings 15%
Bridges, platforms, pipelines, permanent way and railway lines 10%
(EAVY EQUIPMENT 33.33%
Vehicles 33.33%
Furnishings 33.33%
/THER EQUIPMENT AND TOOLS 15%
Aircraft and ships 15%
Hospital buildings and educational establishments 100%
3CIENTIlC RESEARCH IMPLEMENTS 100%
!MORTISATION OF INTANGIBLE ASSETS IS ALSO ALLOWED AT A RATE APPROVED BY THE 3ECRETARY
'ENERAL OF 4AXATION !FFAIRS

In case of buildings used for industrial purposes (excluding buildings for housing of
EMPLOYEES OFlCE AND STORAGE  THE STATED RATES OF DEPRECIATION SHALL BE DOUBLED O

)N CASE OF TOOLS AND EQUIPMENT WHICH ARE USED FOR THREE SHIFTS OF WORK PER DAY
depreciation rate stated above shall be increased by a maximum of 50%. The additional
depreciation to be computed by reference to the number of days that the tools and
EQUIPMENT ARE USED FOR THREE SHIFTS IN PROPORTION TO THREE HUNDRED WORKING DAYS PER YEAR

For Tax year ending after 31 December 2009

Depreciation: A major change in depreciation under the new Income Tax Decree
is the introduction of the concept of pooling of assets. According to this concept,
all assets coming under a certain category would be depreciated by applying
DEPRECIATION RATE AS SPECIlED IN THE NEW )NCOME 4AX $ECREE ON WRITTEN DOWN VALUE
method, which would be computed as under:
/PENING NET WRITTEN DOWN VALUE
!DD ADDITIONS MADE DURING THE YEAR
,ESS 3ALE PROCEEDS DURING THE YEAR

#ONSEQUENT TO ABOVE CHANGE IN THE DEPRECIATION METHODOLOGY THERE WILL BE NO

BALANCING CHARGE OR BALANCING ALLOWANCE IE THERE WILL BE NO PROlT OR LOSS ON SALE OF
assets for tax computations.

Earlier, under old Tax Decree, depreciation was allowed on straight line method. Now,
as per the new Income Tax Decree, it will be allowed on written down value method

PKF Worldwide Tax Guide 2010 3

 Oman

ON ALL ASSETS EXCEPT FOR DEPRECIATION ON "UILDINGS !IRCRAFTS AND 3HIPS WHICH WOULD
CONTINUE ON STRAIGHT LINE BASIS 4HE DEPRECIATION RATE ON &IRST CLASS BUILDING IS 
AND ON 3ECOND CLASS BUILDING !IRCRAFT AND 3HIPS IS 

The depreciation rates have remained the same for all assets, except for depreciation
RATES FOR #OMPUTERS AND 3OFTWARE WHICH IS NOW REVISED FROM  TO  AND ON
Drilling rigswhich will now be allowed at the rate of 10%.

STOCK/INVENTORY
/MAN TAX REGULATIONS DO NOT SPECIlCALLY ESTABLISH WHICH METHODS OF INVENTORY
VALUATION MUST BE USED NOR HOW INVENTORY mOWS BE DETERMINED !T PRESENT ANY OF
THREE METHODS n AVERAGE &)&/ OR ,)&/ n ARE DEEMED TO REPRESENT THE @ACTUAL COST
REQUIRED BY TAX RULES

Reserves and provisions for inventory shortages and obsolescence are not
acceptable as a deductible expense for tax purposes but actual losses and write
offs are allowed in the year in which they occur provided they are supported with
ADEQUATE DOCUMENTATION

CAPITAL GAINS AND LOSSES

Capital gains and losses are normally regarded as part of ordinary corporate income.

DIVIDENDS
Income tax is not chargeable on dividends received by sole proprietary commercial
establishments and by companies on shares held in the capital of another company
registered in Oman.

INTEREST DEDUCTIONS
Interest paid on the borrowing used for business purposes is deductible.

LOSSES
.ET OPERATING LOSSES CAN BE CARRIED FORWARD AND SET OFF AGAINST SUBSEQUENT PROlTS FOR
lVE YEARS #OMPANIES FOR WHICH PREFERENTIAL RATES OF TAXATION APPLY CAN INDElNITELY
CARRY FORWARD THEIR LOSSES BEYOND THE EXEMPTED PERIOD OF lVE YEARS AND DEDUCT IT IN
SUBSEQUENT YEARS UNTIL LOSSES ARE FULLY ABSORBED

C. FOREIGN TAX RELIEF

3ULTANATE OF /MAN HAS ENTERED INTO AGREEMENTS FOR THE AVOIDANCE OF DOUBLE TAXATION
(DTA) and the prevention of avoiding income tax with France, India, Tunisia, United
+INGDOM -AURITIUS )TALY 0AKISTAN !LGERIA ,EBANON #HINA 9EMEN 3OUTH !FRICA
3UDAN 3EYCHELLES )RAN #ANADA 4URKEY 3YRIA 2EPUBLIC OF 3OUTH +OREA 3INGAPORE
4HAILAND 5ZBEKISTAN "ELARUS "RUNEI .ETHERLANDS -ALDOVA 6IETNAM "ELGIUM
-ALAYSIA AND 3OUTH +OREA
Currently, most of the foreign airlines carrying on business through establishment in
Oman are exempted from income tax either through comprehensive DTAs or limited
DTAs. The foreign airlines which earn income through establishment in Oman, and
which do not have comprehensive DTAs or limited DTAs, would be exempted from
O TAX EFFECTIVE FROM  *ANUARY  PROVIDED RECIPROCAL TAX EXEMPTION IS GRANTED IN
THE AIRLINES HOME COUNTRY 4HE COUNTRIES WHOSE AIRLINES HAVE SIGNED AGREEMENTS FOR
TAX RELIEF ARE )NDIA +UWAIT *ORDAN .ETHERLANDS 4ANZANIA 3RI ,ANKA )RAN 3INGAPORE
3WEDEN AND 3WITZERLAND

4AX CREDIT IS UNILATERALLY ALLOWED BY CERTAIN COUNTRIES EG THE 5+ 53! AND 'ERMANY
in respect of tax paid by foreign business entities in Oman, on satisfaction of certain
conditions.

Income earned overseas by a PE (permanent establishment) in Oman will be taxed in

Oman. Corresponding tax credit in Oman will be given to the extent of Omani tax i.e.
12% or foreign tax paid on that income whichever is lower.

D. CORPORATE GROUPS

There are no provisions for group taxation or for off setting losses of one company
against another.

E. RELATED PARTY TRANSACTIONS

4RANSACTIONS WITH RELATED PARTIES ARE SUBJECT TO DETAILED SCRUTINY TO CONlRM THAT
PRICES ARE AT ARMS LENGTH AND THAT EXPENSES EXCLUDE ELEMENT OF PROlTS IN CASE OF
TRANSACTIONS BETWEEN (EAD /FlCE AND BRANCH AND  SUBSIDIARY COMPANIES

4 PKF Worldwide Tax Guide 2010

 Oman

F. WITHHOLDING TAX

Withholding taxes have been introduced on foreign companies which have no

permanent establishment in Oman and receive royalties, fees in return for management,
RENT OF EQUIPMENT MACHINERY AND DEVICES OR AMOUNTS IN RETURN OF TRANSFER OF TECHNICAL
@KNOW HOW OR RESEARCH AND DEVELOPMENT FROM COMPANIES OR PERMANENT ESTABLISHMENT
situated in Oman. Tax at the rate of 10% of the gross income shall be deducted at
source. The obligation to deduct this tax shall rest with the company or the permanent
establishment which pays the above amount.

G. EXCHANGE CONTROL

There are no exchange controls in any form on inward or outward investment or on

REPATRIATION OF CAPITAL OR PROlTS EITHER BY NATIONALS OR EXPATRIATES

H. PERSONAL TAX

#URRENTLY THERE IS NO PERSONAL INCOMEWEALTH TAX IN /MAN

I. TREATY WITHHOLDING TAX RATES

The following rates for royalties apply:

Royalties
(%)
Treaty countries
Algeria 10
Canada 10 (1)
China 10
Egypt 15
France 0
India 10
Iran 10
Italy 10
Korea 8
,EBANON 10
Mauritius 0
Moldova 10
0AKISTAN 12.5
Russia 5
3EYCHELLES 10 O
3INGAPORE 8
3OUTH !FRICA 8
Thailand 15
Tunisia 5
4URKEY 10
United Kingdom 0
9EMEN 10

1 Copyright royalties are not subject to withholding tax under the provisions of this
treaty.

PKF Worldwide Tax Guide 2010 5

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