24 May 2019
OMAN: 10% Withholding Tax on Dividends Suspended
Oman’s Capital Market Authority (CMA) confirmed on 16 May 2019 that the government is suspending the 10% withholding tax on shares and interest payments for at least three years, effective from 6 May 2019.
The withholding tax was imposed after the issuance of the Income Tax Law promulgated by Royal Decree No. 9/2017, which came into force on 26 February 2017. At that time, withholding tax at 10% was extended to include dividend payments and interest and payments for services. Previously, it had only applied to royalty payments, management fees, consideration for computer software rights or use and consideration for research and development.
According to Abdullah bin Salim al Salmi, Executive President of the CMA, the tax waiver is aimed at creating a more attractive environment for foreign investments desired for the development of the country, and is in line with the open doors policy adopted by the country with regard to the foreign investments.
In accordance with the country’s Oman 2020 economic plan, the country is currently in the process of updating its commercial regulatory framework. It has recently enacted the Commercial Companies Law and is working on amendments to its Foreign Capital Investment Law, which currently restricts foreign ownership in local entities to 45%. The changes are expected to allow foreign companies or individuals to increase their ownership within local companies, possibly to 100%, and remove other major restrictions on foreign investors, such as the requirement to have a local partner, and the minimum capital requirement of OMR150,000 (US$390,000) to set up a business in Oman.