Businesses are taxed as separate entities, and the tax law does not recognise group taxation.
Transactions between related parties must be valued at arm’s length. There is no specific guidance on acceptable methods for determining an arm’s-length price.
All inter-company payments are scrutinised in detail to ensure that the profits are not transferred to avoid payment of tax.
If the debt-to-equity ratio exceeds 2:1 in the case of related party debt, interest on the excess debt is not deductible for tax purposes. This rule does not apply to banks and insurance companies, PEs of foreign companies, or proprietary (Omani owned) establishments.
Controlled foreign companies (CFCs)
There is no CFC regime in Oman.