Oman's Income Tax Law imposes a withholding tax of 10% of the gross amount paid on specific types of income earned in Oman by a non-resident, and the person paying this amount must deduct the tax and remit it to the Tax Authority by the fourteenth day of the end of the month in which the payment was made.
Types of Income Subject to Withholding Tax
The law provides that the tax is imposed on the following types of income earned in Oman: royalties, consideration for research and development, consideration for the use of, or the right to use, computer software, fees for management or the performance of services, and dividend or interest distributions.
The Withholding Tax Rate
The law sets the rate of this tax at 10% of the gross amount paid or credited to the account of the non-resident person, and the tax is imposed on the gross amount without deducting any costs.
The Payer's Obligation to Withhold and Remit
Any taxable person who pays or credits to an account any amounts of the types mentioned above must deduct the tax from the gross amount and remit it to the Tax Authority by a deadline no later than the fourteenth day of the end of the month in which the amount was paid or credited to the account, whichever is earlier, accompanied by a statement on the form prepared for this purpose.
The Same Obligation Applies to Government Entities
The same obligation to withhold and remit the tax applies to ministries, authorities, public institutions and other public legal persons that pay or credit to an account any amounts of the types subject to withholding tax.
Why Withholding Tax Matters for Dealings with Foreign Parties
The importance of withholding tax arises from the fact that it is imposed on a non-resident person who is not directly subject to Oman's usual tax procedures, so the law places the burden of deducting and remitting the tax on the Omani paying entity on that person's behalf. Since the tax is calculated on the gross amount without deducting any costs, any company dealing with foreign parties in areas such as royalties, management fees, or software use needs to review its contracts to ensure this tax is correctly calculated before settling amounts due, since the law places responsibility for withholding and remitting the tax on the Oman-resident paying entity itself, not on the non-resident beneficiary who receives the net amount after the deduction. This remittance to the Authority must be accompanied by a statement on the form prepared for this purpose, and a copy of this form is sent to the recipient of the amount as proof of the tax withheld.
Legal References
- Income Tax Law (as amended) — Article 52
- Income Tax Law (as amended) — Article 53
- Income Tax Law (as amended) — Article 113
For questions about your specific situation, you can ask the Oman Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.