OMAN LAW AND PRACTICE Contributed by: Said Al-Shahry, Thamer Al-Shahry, Jeremy Pooley, Maria Mariam Rabeaa Petrou, Shadha Al Kharusi and Salim Al Harthi, Said Al Shahry & Partners (SASLO )
debt is not deductible for tax purposes. This rule applies to all Omani taxpayers other than banks and insurance companies, permanent estab - lishments of foreign companies or proprietary (Omani-owned) establishments. Interest paid to related parties is allowed only to the extent the loan terms are at arm’s length. 5.6 Transfer Pricing Transactions between related parties must be valued at arm’s length. There is no specific guid - ance on acceptable methods for determining an arm’s-length price. In practice, the Oman tax authorities apply transfer pricing rules in accord - Oman has stringent anti-evasion rules. Where a taxpayer fails to declare the correct income in their income return, the Chairman of the tax authority may impose a fine of between 1% and 25% of the difference between the tax value of the taxpayer’s actual taxable income and the tax value as per the return submitted. ance with OECD guidelines. 5.7 Anti-Evasion Rules Subject to any harsher punishment specified in the Penal Code or any other law, the following offences are punishable by imprisonment for a period of between six months and three years and/or by a fine of between OMR5,000 and OMR50,000: • intentional refusal by the tax manager to sub - mit the actual taxable income; • intentional abetment or assistance of the person subject to tax to submit incorrect tax declarations, accounts, records, lists of assets or debits or other documents relating to the tax return of the person subject to tax; • intentional destruction, concealment or dis - posal of any documents, records, accounts or lists required by the Tax Authority to be
submitted if such destruction, concealment or disposal takes place within two years of the date of receipt of the Tax Authority’s notice; or • intentional violation of the obligations to, among other things, provide data, informa - tion or documents regarding taxation-related international treaties or failure to do so as a result of gross negligence. 5.8 Tariffs Oman’s tariff regime is primarily governed by the Gulf Cooperation Council (GCC) Common External Tariff, under which most imports are subject to a standard customs duty of 5%. How - ever, higher tariffs – sometimes reaching up to 100% – are applied to selected goods in line with cultural, health and economic objectives. These include products such as tobacco, alco - hol, energy drinks and pork, largely due to pub - lic health and religious considerations. In con - trast, essential goods such as basic foodstuffs, medicines and humanitarian items are typically exempt from customs duties. While tariff rates are generally not country-spe - cific, Free Trade Agreements (FTAs) play a key role in reducing or eliminating customs duties. Imports from GCC member states benefit from duty-free access, provided they meet the appli - cable rules of origin. The US-Oman Free Trade Agreement also provides near-complete tariff exemption for qualifying goods from the United States, while the GCC-Singapore FTA offers preferential terms for eligible imports from Sin - gapore. Oman’s tariff policy seeks to balance trade lib - eralisation with the protection of key domestic industries. In 2025, the country adopted the GCC Unified 12-digit Tariff Code, standardis - ing product classification across the region and
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