Oman’s tax system broadly addresses transfer pricing. Formal documentation isn’t mandatory during income tax filing, but an extended 10-year enquiry period allows the Tax Department to scrutinize related party transactions for tax avoidance.
Oman’s income tax law contains provisions for related party transactions. It empowers the Tax Department to disregard related party transaction values in favor of independent prices, facilitating the prevention of tax avoidance.
Individuals or entities are considered related if one party controls the other directly or indirectly. Relationships extend to relatives within the third lineage, such as grandparents to grandchildren.
Disclosure of related party transactions is required in income tax returns. There’s no prescribed format for these disclosures, but they’re typically referred to in audited financial statements submitted with the income tax return.
The Tax Department’s 10-year enquiry period, starting from the end of the tax year, empowers them to request documentation after income tax filing. Lack of documentation might pose challenges.
Oman lacks an APA mechanism, limiting taxpayers’ options to obtain one.
The Tax Department actively seeks documentary evidence to support related party transactions. To clear a backlog, they often assess multiple tax years simultaneously, placing the onus on companies to provide documentation.
Oman doesn’t specify detailed transfer pricing documentation requirements.
While no formal documentation is mandated, some analysis to support pricing methods is advisable.
Failure to pay additional tax by the due date results in a 1% monthly charge on the unpaid amount.