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Branch and head office charges

Can our Oman branch deduct head office overheads?

The situation

Branch costs, including head office allocations, must be supported and at arm's length.

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
  • Income Tax Law, Royal Decree 28/2009: 15 percent corporate income tax on taxable income; 55 percent on petroleum sales

What it means for you

Allocate head office costs using a reasonable key, such as headcount or revenue, and keep evidence. Unsupported allocations are commonly disallowed. Check whether any fee element carries 10 percent WHT.

What to do

  1. Agree an allocation method.
  2. Keep support.
  3. Check WHT.
  4. Disclose.

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

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