Question

Evaluate the tax implications for business Establishment of company in Oman

Answer 1

Under Oman Tax Law, a permanent establishment ('PE') is defined as a fixed place of business through which a foreign person conducts a business wholly or partially in Oman. This includes distribution locations, management locations, branches, offices, warehouses, workshops, mines, quarries and building sites, construction sites, or assembly projects where operations are carried out for more than 90 days. Nevertheless, the use of storage or display facilities, the management of a stock of goods, the procurement of goods or the processing of business details, and/or other preparatory or auxiliary activities does not produce a PE in Oman.

Corporate income tax is imposed on all sources of income (including capital gains) received or realized in Oman by a business or institution or a PE. Omani companies are also liable to tax their profits overseas. Credit is granted for taxes incurred overseas regardless of whether Oman has a double tax treaty with the country in which the operation is carried out. The credit is limited to the Oman taxes that relate to these overseas revenue.

At source, a 10 per cent withholding tax is applied to sums charged or credited to foreign persons who have no income assigned to a permanent establishment in Oman for the following income categories: Royalties.
Executive Charges.  Fees for service results (with specified exclusions for participation in organisations, conventions, seminars and exhibitions / training / transport and insurance on / air tickets and lodging abroad / board meetings / reinsurance payments / services related to activities or properties outside Oman).

Oman has a bicameral legislature which includes two bodies, the State Council and the Consultative Council. The State Council consists of 84 members who are appointed by the Sultan for a term of four years. They are responsible for assisting the Government in implementing the overall development strategy and will contribute to deepening the foundations of the Omani nation, preserving the accomplishments of the country and defining the values of the state's basic law. The Consultative Council consists of 84 members who are directly elected and are responsible for reviewing draft economic and social legislation.