Transfer Pricing
Country Summary

This document summarizes the transfer pricing requirements and regulations in Oman. Oman’s approach to transfer pricing involves broad related party principles within its tax law. While there’s no formal transfer pricing documentation requirement during income tax filing, the Tax Department has an extended 10-year enquiry period, which can create challenges in responding to inquiries, especially when key personnel or documents are unavailable. This system allows the Tax Department to adjust taxable income based on independent prices for related party transactions, ultimately focusing on tax avoidance.


Guidance and Challenges:

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.

Regulatory Framework:

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.

Definition of Related Party:

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.

Transfer Pricing Documentation:

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.

10-Year Enquiry Period:

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.

Advance Pricing Agreement (APA):

Oman lacks an APA mechanism, limiting taxpayers’ options to obtain one.

Audit Practice:

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.

Transfer Pricing Documentation Requirements:

Oman doesn’t specify detailed transfer pricing documentation requirements.

Choice of Transfer Pricing Method:

While no formal documentation is mandated, some analysis to support pricing methods is advisable.

Penalties and Interest:

Failure to pay additional tax by the due date results in a 1% monthly charge on the unpaid amount.

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