KPMG tax workshop focuses on implementation of withholding taxes for Omani businesses

March 14, 2017

KPMG hosted a workshop to address in detail the practical implementation and compliance of the significant amendments to Oman’s income tax law. The workshop was held at Crowne Plaza Muscat on Sunday.

Ashok Hariharan, partner and head of tax for KPMG Lower Gulf, explained scenarios where withholding tax deduction in Oman on payment of fees for services and interest payments to non-residents could possibly become a bone of contention during future price negotiations by Omani businesses with their foreign lenders or service providers. He also explained how Omani businesses can manage to avoid the same from becoming an additional cost in their hands, according to a press release.

Hariharan cautioned that many foreign taxpayers will expect the taxes imposed on their incomes to be borne by local businesses. “To avoid this, in all situations, the payer of service fees/interest should diligently enquire about the possibility of the foreign payee’s ability to claim tax credit for the taxes withheld in Oman, to ensure that it does not end up becoming an additional cost in the hands of Omani businesses,” he suggested.

Hariharan also highlighted that such tax credit against home country tax liability can be availed not only under the bilateral tax treaties that Oman has entered into with other countries, but also as a unilateral tax credit under the home country tax laws, where such enabling provisions exist for this purpose.