Disclosure Requirements
Although not set under the transfer pricing rules, Oman follows International Financial Reporting Standards. Therefore, disclosure of related party transactions in a taxpayer's financial statements is expected by the tax authorities. Taxpayers are required to provide information on related party transactions as a part of the annual tax returns (as a separate schedule) in the prescribed format.
Standard Documentation
There are no specific transfer pricing documentation requirements in Oman other than the recently introduced Country-by-Country reporting rules (see below). Nevertheless, sufficient documentation substantiating the compliance of a taxpayer’s transactions with related parties should be kept. Detailed documentation requested by the tax authorities will be made on a case-by-case basis.
The OECD documentation guidelines are generally acceptable by the Oman tax authorities.
Country-by-Country (CbC) Reporting
Oman has introduced Country-by-Country (CbC) reporting requirements for multinational enterprise (MNE) groups headquartered and/or operating in Oman. The reporting requirement applies for reporting fiscal years beginning on or after 1 January 2020 for MNE groups having an annual consolidated group revenue of at least OMR 300 million in the previous year. CbC reports are required to be filed electronically within 12 months following the end of the reporting fiscal year.
The reporting requirement primarily applies for ultimate parent entities resident in Oman, although secondary local filing requirements for non-parent constituent entities may apply if the following conditions are met:
- The ultimate parent entity is not required to submit a CbC report in its jurisdiction of residence;
- The ultimate parent entity’s jurisdiction has an international agreement for the exchange of CbC reports with Oman but not a qualifying competent authority agreement; or
- There has been a systemic failure for the exchange of the CbC report, and this has been communicated by the Oman authority to the constituent entity.
If there is more than one constituent entity, one constituent entity may be designated to submit the report, and the same should be notified to the authority. Further, secondary local filing will not be required if a surrogate parent entity has been designated in another jurisdiction and certain conditions are met, including that the CbC report will be exchanged with Oman.
On 7 July 2021, the Oman Tax Authority announced the suspension of CbC filing until further notice. The announcement impacts at this stage the filing of CbC reports for the reporting year 2020, otherwise due by 31 December 2021. On 14 July 2021, however, the Tax Authority clarified that the filing suspension applies only to MNE groups with an ultimate or surrogate parent entity outside of Oman. Therefore, the filing obligation of MNE groups with an Omani ultimate parent company remains intact. The secondary local filing suspension appears to be motivated by the fact that Oman has so far not concluded any CbC Competent Authority exchange agreements, which would make local filing almost universally applicable to all Omani constituent entities with a non-resident ultimate parent meeting the reporting thresholds.
A CbC notification is required to be filed by the last day of the reporting fiscal year of such an MNE group. The notification should identify whether the constituent entity is the ultimate parent entity, surrogate parent entity, or other designated reporting entity. If the constituent entity is neither the ultimate parent entity nor surrogate parent entity, the notification should include the identity and tax residence of the reporting entity. The suspension of CbC filing for MNE groups with a non-Omani ultimate or surrogate parent (see above) does not affect the notification obligation, and the latter remains applicable also in the case of foreign-parented MNEs.
CbC notification requirements also apply to Oman constituent entities of MNE groups headquartered outside of Oman.
CbC filings must be mandatorily e-filed via Oman Tax Authority AEOI Portal.
Language of Documentation
The transfer pricing documentation may be submitted in English or Arabic. However, the tax authorities may request for a summary in Arabic, where the documentation is submitted in English.
Penalties
There are no penalties specific to transfer pricing adjustments in Oman. If an adjustment is made, the standard late payment penalty of 1% per month of the tax due will apply (see Sec. 13.5.).