Head office management fees
Is our parent's management fee deductible in Oman?
The situation
Related party charges must be arm's length, and management fees to non-residents carry 10 percent WHT.
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 (withholding tax on non-residents): 10 percent WHT on royalties, technical service fees and management fees paid to non-residents; dividend and interest WHT suspended indefinitely from January 2023
What it means for you
Keep the service agreement, cost base, allocation keys and proof of services received. On a OMR 50,000 fee, withhold OMR 5,000. Without evidence, the deduction can be denied.
What to do
- Sign a service agreement.
- Keep proof of services.
- Withhold 10 percent.
- Disclose in the return.
We can do this for youRelated party pricing, return disclosure and thin capitalisation review: OMR 750