Scope of Application
While there is no specific legislation with respect to transfer pricing (TP), Omani tax law requires that transactions between related parties be conducted in accordance with the arm’s length principle. The tax authorities are empowered to make adjustments if transactions are deemed non-compliant.
Definition of Related Parties
For the purpose of transfer pricing, related parties can generally be defined as when one party holds a greater share than any other shareholder in the capital or voting rights of the other party, or when a third party holds a greater share than any other shareholder in the capital or voting rights of both parties.
Applicable TP Methods
There are no rules specifying certain transfer pricing methods in Oman. Although, the OECD guidelines have been taken into account by Oman's tax authorities, which include the following methods:
- Comparable uncontrolled price (CUP) method;
- Resale price method;
- Cost-plus method;
- Profit split method; and
- Transactional net margin method.
Oman's law states that pricing shall be taken into account, assuming the terms on which the transactions would have been entered by independent persons, which indicates the CUP method would be preferred. In practice, though, the best method for the particular transaction based, notably, on the availability of appropriate comparables is used.
Use and Availability of Comparables
Oman has not issued any specific rules regarding comparables.