Dividend
Omani law provides for a 10% withholding tax on dividends paid to non-residents. However, pursuant to a notification published by the Oman Capital Markets Authority (CMA), Oman has suspended the dividend withholding tax for a period of 3 years effective from 6 May 2019. As part of the ‘Oman Vision 2040’, which aims at the economic recovery of the country from the COVID-19 pandemic, the suspension is extended for an additional 2 years, i.e., until the tax year 2024.
The 10% dividend withholding tax was introduced with effect from 27 February 2017, and the law already provided for relatively wide-ranging exemption. Hence, the CMA clarified in its Circular E/3/2017 that the withholding tax only applies to dividends paid by Omani joint-stock companies, and to dividends paid in accordance with the provisions of the Commercial Companies Law. In addition, the withholding tax does not apply to dividends paid to nationals of other Gulf Cooperation Council (GCC) Member States, which include Bahrain, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates.
In Decree No. 14/2019, it has been clarified that the withholding tax requirement does apply to distributions made by investment funds in respect of investment securities.
Interest
Omani law provides for a 10% withholding tax on interest paid to non-residents, subject to a number of exemptions. However, pursuant to a notification published by the Oman Capital Markets Authority (CMA), Oman has suspended the interest withholding tax for a period of 3 years effective from 6 May 2019. As part of the ‘Oman Vision 2040’, which aims at the economic recovery of the country from the COVID-19 pandemic, the suspension is extended for an additional 2 years, i.e., until the tax year 2024.
The 10% interest withholding tax was introduced with effect from 27 February 2017.
Interest payments include interest derived from any type of loan, whether or not guaranteed or providing a right to participate in the debtor's profit. However, the following interest payments are excluded:
- Interest paid by Omani banks on deposits;
- Proceeds from bonds and sukuk issued by the Omani Government or Omani banks; and
- Inter-bank loan interest, provided the repayment term is less than 5 years.
Royalty Copyright
Tax is withheld at the rate of 10% from gross royalties paid to non-residents.
Royalty Patent
Tax is withheld at the rate of 10% from gross royalties paid to non-residents.
Royalty Trademark
Tax is withheld at the rate of 10% from gross royalties paid to non-residents.
Service Management
Tax is withheld at the rate of 10% on payments made by an Oman resident for management services performed by a non-resident without an Oman permanent establishment. It is clarified that the withholding tax is applicable regardless of where the services are performed (see Sec. 5.5.).
Service Technical
Tax is withheld at the rate of 10% on payments made by an Oman resident for technical services performed by a non-resident without an Oman permanent establishment. It is clarified that the withholding tax is applicable regardless of where the services are performed (see Sec. 5.5.).
Below is a discussion of domestic withholding tax rules for most of the common cross-border payments.
| Capital Gains |
0%
|
| Dividends |
0%
|
| Interest |
0%
|
| Royalty Copyright |
10%
|
| Royalty Patent |
10%
|
| Royalty Trademark |
10%
|
| Sales |
0%
|
| Service Management |
10%
|
| Service Technical |
10%
|
* Rates are current as of 19 March 2023