Oman PKF Tax Guide 2010

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Oman

Tax Guide

2010


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PKF Worldwide Tax Guide 2010 I

Foreword

FOREWORD

For any business looking to set up in a new market, one of the critical deciding

factors will be the target countrys tax regime. What is the corporate tax rate? Whatcapital allowances can we benefit from? Are there double tax treaties? How willforeign source income be taxed?

Since 1994, the PKF network of independent member firms, which is administeredby PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) toprovide businesses with the answers to these key tax questions. This handy referencemanual provides clients and professional practitioners with comprehensive internationaltax and business information for over 100 countries throughout the world.

As you will appreciate, the production of the WWTG is a huge team effort and I wouldlike to thank all the member firms of the PKF network who gave up their time tocontribute the vital information on their countrys taxes that forms the heart of thispublication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKFWitt Mares, and Rachel Yeo and Scott McKay, PKF Melbourne for co-ordinating andchecking the entries from within their regions.

This years WWTG is the largest ever reflecting both how the PKF network is growingand the strength of the tax capability offered by member firms throughout the world.

I hope that you find that the combination of reference to the WWTG plus assistancefrom your local PKF member firm will provide you with the advice you need to makethe right decisions for your international business.

Mark PollockPKF PerthChairman, International Tax Committee of the PKF network


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PKF Worldwide Tax Guide 2010

Disclaimer

II

IMPORTANT DISCLAIMER

This publication should not be regarded as offering a complete explanation of the

taxation matters that are contained within this publication.This publication has been sold or distributed on the express terms and understandingthat the publishers and the authors are not responsible for the results of any actionswhich are undertaken on the basis of the information which is contained within thispublication, nor for any error in, or omission from, this publication.

The publishers and the authors expressly disclaim all and any liability andresponsibility to any person, entity or corporation who acts or fails to act as aconsequence of any reliance upon the whole or any part of the contents of this

publication.

Accordingly no person, entity or corporation should act or rely upon any matter orinformation as contained or implied within this publication without first obtainingadvice from an appropriately qualified professional person or firm of advisors, andensuring that such advice specifically relates to their particular circumstances.

PKF International is a network of legally independent member firms administered byPKF International Limited (PKFI). Neither PKFI nor the member firms of the network

generally accept any responsibility or liability for the actions or inactions on the partof any individual member firm or firms.


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P

reface

VI

PREFACE

The PKF Worldwide Tax Guide 2010 (WWTG) has been prepared to provide an

overview of the taxation and business regulation regimes of over 100 of the worldsmost significant trading countries. In compiling this publication, member firms of thePKF network have sought to base their summaries on information current as of 30September 2009, while also noting imminent changes where necessary.

On a country-by-country basis, each summary addresses the major taxes applicable tobusiness; how taxable income is determined; sundry other related taxation and businessissues; and the countrys personal tax regime. The final section of each countrysummary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relatingto the payment of dividends, interest, royalties and other related payments.

While the WWTG should not to be regarded as offering a complete explanation ofthe taxation issues in each country, we hope readers will use the publication as theirfirst point of reference and then use the services of their local PKF member firm toprovide specific information and advice.

In addition to the printed version of the WWTG, individual country taxation guides areavailable in PDF format which can be downloaded from the PKF website at www.pkf.com

Finally, PKF International Limited gladly welcomes any comments or thoughts readersmay wish to make in order to improve this publication for their needs. Please contactKevin F Reilly, PKF Witt Mares, 10304 Eaton Place, Suite 440, Fairfax, Virginia 22030,USA by email to [email protected]

PKF INTERNATIONAL LIMITEDAPRIL 2010

PKF INTERNATIONAL LIMITED

ALL RIGHTS RESERVEDUSE APPROVED WITH ATTRIBUTION


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PKF Worldwide Tax Guide 2010 VII

Introduction

ABOUT PKF INTERNATIONAL LIMITED

PKF International Limited (PKFI) administers a network of legally independent

firms. The PKF network is the 11th largest global accountancy network with over240 legally independent member and correspondent firms which have a combinedannual turnover of $1.9 billion. Located in 125 countries, the member firms of thePKF network share a commitment to providing clients with high quality, partner-ledservices tailored to meet each clients own specific requirements.

The membership base of the PKF network has grown steadily since it was formedin 1969. Added to the sustained growth in the number of PKF member firms, thissolidity has provided the foundations for the global sharing of expertise, experienceand skills and the development of services that meet the evolving needs of all types

of client, from the individual to the multi-national corporation.

Services provided by member firms include:

Assurance & AdvisoryInsolvency Corporate & PersonalFinancial PlanningTaxationCorporate Finance

Forensic AccountingManagement ConsultancyHotel ConsultancyIT Consultancy

PKF member firms are organised into five geographical regions covering Africa; LatinAmerica and the Caribbean; Asia Pacific; Europe, the Middle East & India (EMEI); andNorth America. Each region elects representatives to the board of PKF InternationalLimited, which administers the network. While the member firms remain separate andindependent, international tax, corporate finance, professional standards, audit, hotel

consultancy and business development committees also work together to improvequality standards, develop initiatives and share knowledge across the network.

Please visit www.pkf.com for more information.


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Structu

re

VIII

STRUCTURE OF COUNTRY DESCRIPTIONS

A. TAXES PAYABLE

FEDERAL TAXES AND LEVIESCOMPANY TAXCAPITAL GAINS TAXBRANCH PROFITS TAXSALES TAX/VALUE ADDED TAXFRINGE BENEFITS TAXLOCAL TAXESOTHER TAXES

B. DETERMINATION OF TAXABLE INCOME

CAPITAL ALLOWANCESDEPRECIATIONSTOCK/INVENTORYCAPITAL GAINS AND LOSSESDIVIDENDSINTEREST DEDUCTIONSLOSSES

FOREIGN SOURCED INCOMEINCENTIVES

C. FOREIGN TAX RELIEF

D. CORPORATE GROUPS

E. RELATED PARTY TRANSACTIONS

F. WITHHOLDING TAX

G. EXCHANGE CONTROL

H. PERSONAL TAX

I. TREATY AND NON-TREATY WITHHOLDING TAX RATES


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TimeZones

PKF Worldwide Tax Guide 2010 IX

AAngola . . . . . . . . . . . . . . . . . . . .1 pmArgentina . . . . . . . . . . . . . . . . . . 9 amAustralia -

Melbourne . . . . . . . . . . . . . 10 pmSydney . . . . . . . . . . . . . . .10 pmAdelaide . . . . . . . . . . . . 9.30 pmPerth. . . . . . . . . . . . . . . . . .8 pm

Austria . . . . . . . . . . . . . . . . . . . .1 pm

BBahamas. . . . . . . . . . . . . . . . . . .7 amBahrain . . . . . . . . . . . . . . . . . . . .3 pmBarbados. . . . . . . . . . . . . . . . . . .8 amBelgium. . . . . . . . . . . . . . . . . . . .1 pmBelize . . . . . . . . . . . . . . . . . . . . .6 amBermuda . . . . . . . . . . . . . . . . . . .8 am

Bolivia . . . . . . . . . . . . . . . . . . . . .8 amBotswana . . . . . . . . . . . . . . . . . .2 pmBrazil. . . . . . . . . . . . . . . . . . . . . .7 amBrunei . . . . . . . . . . . . . . . . . . . . .8 pmBulgaria. . . . . . . . . . . . . . . . . . . .2 pm

CCameroon . . . . . . . . . . . . . . . . . .1 pmCanada -

Toronto . . . . . . . . . . . . . . . .7 am

Winnipeg . . . . . . . . . . . . . . . 6 amCalgary . . . . . . . . . . . . . . . .5 amVancouver . . . . . . . . . . . . . . 4 am

Cayman Islands . . . . . . . . . . . . . . 7 amChile . . . . . . . . . . . . . . . . . . . . . .8 amChina - Beijing . . . . . . . . . . . . . .10 pmColombia. . . . . . . . . . . . . . . . . . .7 amCosta Rica. . . . . . . . . . . . . . . . . .6 amCroatia . . . . . . . . . . . . . . . . . . . .1 pm

Cyprus . . . . . . . . . . . . . . . . . . . .2 pmCzech Republic . . . . . . . . . . . . . . 1 pm

DDenmark . . . . . . . . . . . . . . . . . . .1 pmDominican Republic . . . . . . . . . . .7 am

EEcuador. . . . . . . . . . . . . . . . . . . .7 amEgypt . . . . . . . . . . . . . . . . . . . . .2 pmEl Salvador . . . . . . . . . . . . . . . . . 6 amEstonia . . . . . . . . . . . . . . . . . . . .2 pm

FFiji . . . . . . . . . . . . . . . . .12 midnightFinland . . . . . . . . . . . . . . . . . . . .2 pmFrance. . . . . . . . . . . . . . . . . . . . .1 pm

G

Gambia (The) . . . . . . . . . . . . . 12 noonGermany . . . . . . . . . . . . . . . . . . .1 pmGhana . . . . . . . . . . . . . . . . . . 12 noonGreece . . . . . . . . . . . . . . . . . . . .2 pmGrenada . . . . . . . . . . . . . . . . . . .8 amGuatemala. . . . . . . . . . . . . . . . . . 6 amGuernsey. . . . . . . . . . . . . . . . 12 noonGuyana . . . . . . . . . . . . . . . . . . . .8 am

HHong Kong . . . . . . . . . . . . . . . . .8 pmHungary . . . . . . . . . . . . . . . . . . .1 pm

IIndia . . . . . . . . . . . . . . . . . . . 5.30 pmIndonesia. . . . . . . . . . . . . . . . . . .7 pmIreland. . . . . . . . . . . . . . . . . . 12 noonIsrael. . . . . . . . . . . . . . . . . . . . . .2 pmItaly . . . . . . . . . . . . . . . . . . . . . . 1 pm

J

Jamaica . . . . . . . . . . . . . . . . . . .7 amJapan . . . . . . . . . . . . . . . . . . . . .9 pmJersey . . . . . . . . . . . . . . . . . . 12 noonJordan . . . . . . . . . . . . . . . . . . . .2 pm

KKazakhstan . . . . . . . . . . . . . . . . .5 pmKenya . . . . . . . . . . . . . . . . . . . . .3 pmKorea . . . . . . . . . . . . . . . . . . . . .9 pm

Kuwait. . . . . . . . . . . . . . . . . . . . .3 pm

LLatvia . . . . . . . . . . . . . . . . . . . . .2 pmLebanon . . . . . . . . . . . . . . . . . . .2 pmLeeward Islands

(Nevis, Antigua, St Kitts) . . . .8 amLibya. . . . . . . . . . . . . . . . . . . . . .2 pmLiberia. . . . . . . . . . . . . . . . . . 12 noonLithuania . . . . . . . . . . . . . . . . . . .2 pm

Luxembourg . . . . . . . . . . . . . . . .1 pm

MMalaysia . . . . . . . . . . . . . . . . . . .8 pmMalta . . . . . . . . . . . . . . . . . . . . .1 pmMauritius. . . . . . . . . . . . . . . . . . .4 pmMexico . . . . . . . . . . . . . . . . . . . .6 amMorocco . . . . . . . . . . . . . . . . 12 noon

NNamibia. . . . . . . . . . . . . . . . . . . .2 pmNetherlands (The). . . . . . . . . . . . .1 pmNetherlands Antilles . . . . . . . . . . .8 amNew Zealand . . . . . . . . . . .12 midnightNigeria . . . . . . . . . . . . . . . . . . . .1 pmNorway . . . . . . . . . . . . . . . . . . . .1 pm

OOman . . . . . . . . . . . . . . . . . . . . .4 pm

PPanama. . . . . . . . . . . . . . . . . . . .7 amPapua New Guinea. . . . . . . . . . .10 pmPeru . . . . . . . . . . . . . . . . . . . . . . 7 amPhilippines. . . . . . . . . . . . . . . . . . 8 pmPoland. . . . . . . . . . . . . . . . . . . . .1 pmPortugal . . . . . . . . . . . . . . . . . . .1 pmPuerto Rico . . . . . . . . . . . . . . . . . 8 am

QQatar. . . . . . . . . . . . . . . . . . . . . .8 amRomania . . . . . . . . . . . . . . . . . . .2 pmRussia -

Moscow/St Petersburg . . . . .3 pm

SSierra Leone . . . . . . . . . . . . . 12 noonSingapore . . . . . . . . . . . . . . . . . .7 pmSlovak Republic . . . . . . . . . . . . . . 1 pmSouth Africa. . . . . . . . . . . . . . . . . 2 pm

INTERNATIONAL TIME ZONES

AT 12 NOON, GREENWICH MEAN TIME, THE STANDARD TIME

ELSEWHERE IS:


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TimeZones

PKF Worldwide Tax Guide 2010X

Spain . . . . . . . . . . . . . . . . . . . . .1 pmSwaziland . . . . . . . . . . . . . . . . . .2 pmSweden. . . . . . . . . . . . . . . . . . . .1 pm

Switzerland . . . . . . . . . . . . . . . . .1 pmTTaiwan . . . . . . . . . . . . . . . . . . . .8 pmTanzania . . . . . . . . . . . . . . . . . . .3 pmThailand . . . . . . . . . . . . . . . . . . .7 pmTrinidad and Tobago. . . . . . . . . . .8 amTurkey . . . . . . . . . . . . . . . . . . . . .2 pmTurks and Caicos Islands . . . . . . .7 am

UUganda . . . . . . . . . . . . . . . . . . . .2 pmUkraine . . . . . . . . . . . . . . . . . . . .2 pmUnited Arab Emirates . . . . . . . . . .4 pmUnited Kingdom . . . . . . .(GMT) 12 noonUnited States of America -

New York City. . . . . . . . . . . .7 amWashington, D.C. . . . . . . . . .7 amChicago. . . . . . . . . . . . . . . .6 am

Houston. . . . . . . . . . . . . . . .6 amDenver . . . . . . . . . . . . . . . .5 amLos Angeles . . . . . . . . . . . . . 4 amSan Francisco . . . . . . . . . . .4 am

Uruguay . . . . . . . . . . . . . . . . . . .9 am

VVanuatu. . . . . . . . . . . . . . . . . . .11 pmVenezuela . . . . . . . . . . . . . . . . . . 8 amVietnam

ZZambia . . . . . . . . . . . . . . . . . . . .2 pm


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Oman

PKF Worldwide Tax Guide 2010 1

OMAN

Currency: Rial Omani Dial Code To: 968 Dial Code Out: 00

(RO)Member Firm:City: Name: Contact Information:Muscat Percy Bhaya 24563 195

[email protected]

A. TAXES PAYABLE

FEDERAL TAXES AND LEVIES

COMPANY TAXFor the tax year ending up to 31 December 2009, net taxable assessed income issubject to the following tax rate structure.(1A) Entities wholly owned by Omanis or where Omani shareholding in the capital of

a company is 51% or more (revised from tax year 2001 to entities wholly ownedby Omanis and mixed ownership companies of which 70% or less than 70%capital is owned by foreigners and further revised to 100% foreign ownershipfor all Omani establishments from the year 2003):

irrespective of the extent of foreign shareholding

fact whether they carry out permitted activity or not and irrespective oftheir percentage of capital contribution will have the applicable tax rate as

(1B) The same tax rate as mentioned above continues for the tax year ending after31 December 2009:

(2A) For the tax year ending up to 31 December 2009, The applicable tax rates for abranch of a foreign company from tax year 2001 is as follows:

Taxable/assessed income (RO) Tax rate

0 to 5,000 0%

5,000 to 18,000 5%

18,000 to 35,000 10%

35,000 to 55,000 15%

55,000 to 75,000 20%

75,000 to 100,000 25%

Over 100,000 30%

The entire taxable income is taxed at the percentage rate corresponding to the the tax payable is calculated as above and is then compared with the sum of the income falls and the amount of the marginal income in excess of the aforesaid limit.The lower of these two amounts is the tax payable.(2B) For Tax year ending after 31st December, 2009, branches of foreign

companies or income earned by a PE in Oman of a foreign company will be

taxed as under:

PETROLEUM COMPANIES

TAX EXEMPTIONS

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Oman


and Mining

hotels and villages with the exception of management contracts

industries

The exemption from tax for companies engaged in the above activities will be

activity commences. The period of exemption may be further extended for a period Financial Affairs and Energy Resources Council. Companies engaged in the above

TAX YEARThe tax year is the calendar year although a special permit can be obtained from the

PROVISIONAL AND ANNUAL RETURNS OF INCOME months of the end of the accounting period.

Annual return and annual tax settlement is due at the end of six months following accounts.

CAPITAL GAINS TAX

Capital gains are normally regarded as part of ordinary corporate income and the Also the loss, if any, will not be allowed as a deductible expense.

BRANCH PROFITS TAXBranches of foreign companies are taxed in Oman if PE of a foreign company is basis.

OTHER TAXESConsumption taxes include the following:

Rate

3%

2%

Hotels and restaurant bills 5%

charged in the Muscat municipality are as follows:

Rate

Hotel income 5%

Property rents 3%

10%

Tax on home owners using the drainage system 10%

VOCATIONAL TRAINING LEVY effective from 8 March 1998.

SOCIAL SECURITY PREMIUM of its Omani employees. Of this amount, 6.5% is recoverable from the Omaniemployees.

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Oman


CUSTOMS DUTIESCustoms duties are levied on certain categories of imported goods. The rates rangefrom 5% to 100%.

B. DETERMINATION OF TAXABLE INCOME

Taxable income is computed in accordance with the generally accepted accountingprinciples applied on a consistent and regular basis. The accrual basis is generallyto be used although, in special cases, the Director of Income Tax may approve cashbasis of accounting.

As a basic rule, all expenses which are incurred wholly and exclusively for thepurposes of business and are incurred to generate the gross income of the

establishment are allowed to be deducted provided they are reasonable consideringvalue of services received. Any expense or cost incurred to generate income which isexempted from income tax will not be allowed as a deductible expense.

restricted basis.

DEPRECIATION AND AMORTISATIONFor Tax year ending up to 31 December 2009

Assets Rate

Permanent buildings 4%

Prefabricated buildings 15%

Bridges, platforms, pipelines, permanent way and railway lines 10%

33.33%

Vehicles 33.33%

Furnishings 33.33%

15%

Aircraft and ships 15%

Hospital buildings and educational establishments 100% 100%

In case of buildings used for industrial purposes (excluding buildings for housing of

depreciation rate stated above shall be increased by a maximum of 50%. The additionaldepreciation to be computed by reference to the number of days that the tools and

For Tax year ending after 31 December 2009

Depreciation: A major change in depreciation under the new Income Tax Decreeis the introduction of the concept of pooling of assets. According to this concept,all assets coming under a certain category would be depreciated by applying

method, which would be computed as under:

assets for tax computations.

Earlier, under old Tax Decree, depreciation was allowed on straight line method. Now,as per the new Income Tax Decree, it will be allowed on written down value method

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Oman


The depreciation rates have remained the same for all assets, except for depreciation Drilling rigswhich will now be allowed at the rate of 10%.

STOCK/INVENTORY

Reserves and provisions for inventory shortages and obsolescence are notacceptable as a deductible expense for tax purposes but actual losses and writeoffs are allowed in the year in which they occur provided they are supported with

CAPITAL GAINS AND LOSSESCapital gains and losses are normally regarded as part of ordinary corporate income.

DIVIDENDSIncome tax is not chargeable on dividends received by sole proprietary commercialestablishments and by companies on shares held in the capital of another companyregistered in Oman.

INTEREST DEDUCTIONSInterest paid on the borrowing used for business purposes is deductible.

LOSSES

C. FOREIGN TAX RELIEF

(DTA) and the prevention of avoiding income tax with France, India, Tunisia, United

Currently, most of the foreign airlines carrying on business through establishment inOman are exempted from income tax either through comprehensive DTAs or limitedDTAs. The foreign airlines which earn income through establishment in Oman, andwhich do not have comprehensive DTAs or limited DTAs, would be exempted from

in respect of tax paid by foreign business entities in Oman, on satisfaction of certainconditions.

Income earned overseas by a PE (permanent establishment) in Oman will be taxed inOman. Corresponding tax credit in Oman will be given to the extent of Omani tax i.e.12% or foreign tax paid on that income whichever is lower.

D. CORPORATE GROUPS

There are no provisions for group taxation or for off setting losses of one companyagainst another.

E. RELATED PARTY TRANSACTIONS

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Oman


F. WITHHOLDING TAX

Withholding taxes have been introduced on foreign companies which have no

permanent establishment in Oman and receive royalties, fees in return for management, situated in Oman. Tax at the rate of 10% of the gross income shall be deducted atsource. The obligation to deduct this tax shall rest with the company or the permanentestablishment which pays the above amount.

G. EXCHANGE CONTROL

There are no exchange controls in any form on inward or outward investment or on

H. PERSONAL TAX

I. TREATY WITHHOLDING TAX RATES

The following rates for royalties apply:

Royalties(%)

Treaty countries

Algeria 10

Canada 10 (1)

China 10

Egypt 15France 0

India 10

Iran 10

Italy 10

Korea 8

10

Mauritius 0

Moldova 10

12.5

Russia 5

10

8

8Thailand 15

Tunisia 5

10

United Kingdom 0

10

1 Copyright royalties are not subject to withholding tax under the provisions of thistreaty.

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