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Arm's length rule in Oman

Do Oman tax rules require related party prices to be at arm's length?

The situation

Yes. Related party pricing should match prices between independent parties, and the Tax Authority can recompute income where it does not.

The law

  • Income Tax Law (related party transactions): Related party dealings must be at arm's length and disclosed in the return; Tax Authority can recompute income

What it means for you

If your Oman company buys goods from its parent at OMR 120 when the market price is OMR 100, the Tax Authority can reduce the cost to OMR 100 and tax the difference at 15 percent. Keep evidence that prices are market based.

What to do

  1. List related party transactions.
  2. Compare prices to market data.
  3. Adjust pricing if needed.
  4. Keep evidence.

We can do this for youRelated party pricing, return disclosure and thin capitalisation review: OMR 750

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