Transfer Pricing in Oman

The legal framework

Oman's transfer pricing rule is among the shortest in the Gulf, and that brevity shapes everything that follows. Corporate income tax rests on the Income Tax Law promulgated by Royal Decree 28/2009, reworked by RD 9/2017 and RD 118/2020 (which transferred administration to the Tax Authority and its Chairman and added a general anti-avoidance rule in Article 131 bis(1)). The Executive Regulation is Ministerial Decision 30/2012, last amended by Tax Authority Decisions 313/2025 and 180/2026. The Arabic text prevails; the OTA's current English consolidation is annotated to RD 118/2020 but omits Articles 134 to 142 on returns, so the filing provisions must be read in the Arabic.

The arm's-length principle occupies Articles 125 to 128 in Part Four, Chapter Two. Article 125 engages the section whenever a taxpayer deals, directly or indirectly, with a related person. Article 126 lets the Authority disregard agreed terms that produce lower taxable income, or a larger deductible or carried-forward loss, than independent parties would have generated, and recompute on independent terms. Article 127 permits a matching recomputation for the counterparty, but only on its written request within twelve months of the primary assessment (Article 128). That is the whole statutory architecture: no methods, no hierarchy, no documentation mandate.

Relatedness turns on control under Articles 132 and 133: the greater part of capital, voting rights, distributable income or assets on dissolution, with future rights counted as present and rights held through nominees or relatives to the third degree attributed to the person. Because Article 125 is not limited to cross-border dealings, domestic intra-group transactions are fully in scope, including dealings between Omani entities taxed at different rates (15 per cent standard under Article 112, 3 per cent for small enterprises, 55 per cent for petroleum under Article 114).

Oman joined the Inclusive Framework in October 2017, yet neither the Law nor the Regulation cites the OECD Transfer Pricing Guidelines, and the OECD publishes no transfer pricing country profile for Oman. The Guidelines persuade but do not bind.

Methods, comparables and benchmarking

No transfer pricing method is named in Omani law, and PwC's mid-2026 review confirms the absence of OTA guidance on acceptable methods. The profession fills the vacuum with OECD analysis: the Omani entity is usually the tested party, the transactional net margin method dominates for distribution, contract manufacturing and services, and the comparable uncontrolled price method serves commodities and interest. There is no safe harbour and no interquartile-range rule.

Comparable searches face thin local data. Practitioners build Middle East sets first and widen to regional or global panels where necessary. Unlike Egypt or Saudi Arabia, Oman has no formal preference for regional comparables and no rule excluding loss-makers, so the burden is persuasion, not checklist compliance.

Two Executive Regulation rules act as de facto pricing limits. Articles 37 to 45 restrict related-party interest for Omani companies to loans not exceeding twice owner's equity, scaling the deduction down above that ratio; banks, insurers and foreign-company PEs sit outside the cap, and a bank PE may deduct head-office interest only on an independent-persons basis (Article 44). Articles 52 to 57 cap unallocated head-office expenses of a PE at 3 per cent of gross income (5 per cent for banks and insurers, 10 per cent for qualifying advanced-technology industrial companies), applied after any Article 126 reduction (Article 55). An arm's-length charge can therefore still be disallowed in part.

Documentation: what the Oman Tax Authority expects

Oman has enacted no master file or local file requirement, no monetary thresholds and no contemporaneous-documentation rule. Online claims of a "Ministerial Decision 164/2023", an OMR 250,000 or 500,000 threshold and a 30-day production window appear nowhere on the OTA portal, at decree.om, or in PwC, Moore Global or EY material, and should be disregarded. What does exist is Article 15's obligation to retain, for at least ten years from the end of the accounting period, every record behind the return, and Executive Regulation Article 144's power to examine them on ten days' notice.

The OTA nonetheless expects arm's-length evidence for related-party payments on audit: intercompany agreements, a functional analysis and benchmarking. Absent a statutory format, an OECD-style local file is the sensible vehicle.

Country-by-country reporting is the only codified BEPS documentation. Tax Authority Decision 79/2020 applies to fiscal years beginning on or after 1 January 2020 for groups with consolidated revenue of OMR 300 million or more in the prior year. Every Oman-resident constituent entity files a notification by the last day of the group's fiscal year; Oman-resident ultimate or surrogate parents file the XML report on the AEOI portal within twelve months of year end. Since July 2021 local filing by subsidiaries of foreign-headquartered groups has been suspended until further notice, but notifications continue for all in-scope entities and Oman-parented groups still report.

The annual return, due within four months of year end under Article 140 with audited accounts attached, carries no transfer pricing schedule; related-party dealings surface only through the financial statement notes.

Audits, penalties and the enforcement climate

Enforcement runs through the ordinary assessment machinery rather than a specialist transfer pricing unit, and it targets the outbound payments that erode the 15 per cent base: management and head-office charges, royalties and related-party interest. Missing agreements, benefit evidence or pricing support lead to estimated assessments.

A transfer pricing adjustment attracts the Article 180 penalty of 1 to 25 per cent of the tax difference between correct and declared taxable income, plus additional tax of 1 per cent per month on the unpaid amount under Article 156. Failure to supply information or records within the time specified is fined RO 200 to 5,000 under Article 181, imposable on the taxpayer, its principal officer or both; late returns cost RO 100 to 2,000 (Article 179). Intentional understatement is criminal under Article 185, carrying up to three years' imprisonment and fines up to RO 50,000; intentional non-filing or failure to keep Article 15 records falls under Article 184.

The time limits are shorter than advisers often suggest. Article 147 bars assessment three years after the end of the tax year in which the return was filed, extended to five years for fraud or where no return was filed; Article 149 applies the same limits to revised assessments. The "ten-year enquiry period" quoted in some summaries is the Article 15 retention rule, not a limitation period. There is no secondary adjustment: a primary adjustment triggers only the optional counterparty recomputation under Articles 127 and 128. Nor is there documentation-based penalty protection; the only statutory mitigation is Article 135 bis, which waives Part Seven penalties where a non-deliberate error is corrected within 30 days of discovery.

Dispute resolution and advance certainty

Oman offers no advance pricing agreement, unilateral or bilateral; its OECD Dispute Resolution Profile, updated in February 2026, answers "no" to every APA question. MAP is therefore the only treaty-based remedy.

The OTA's MAP Guidelines (October 2021) designate the Tax Authority as competent authority acting through its International Cooperation Department. Requests may be made in Arabic or English within three years of first notification, which the OTA counts from receipt of the first assessment notice. It resolves unilaterally where it can, targets 24 months on average and charges nothing; taxpayers must answer document requests within 45 days and accept or reject an agreement within 30 days. Transfer pricing, anti-abuse and bona fide foreign-initiated adjustments are in scope; audit settlements are not. MAP may run alongside an objection or court case, but the OTA will ask for the domestic process to be paused and treats a final judgment as binding. Sixteen older treaties lack an Article 9(2) clause, and the MLI, in force for Oman since 1 November 2020, has cured only one of them because Oman reserved under Article 17(3) against 13 of the 15 non-equivalent agreements it listed; the OTA instead commits to grant MAP access and make corresponding adjustments under Article 9(1) regardless.

Domestically, Part Six sets a three-tier route: written objection to the Chairman within 45 days of the assessment (Article 160); contestation to the judge-chaired Income Tax Committee within 45 days; then a tax suit before the three-judge Primary Court within a further 45 days, with appeal to the Court of Appeal and Supreme Court. Payment is not suspended unless deferral is granted (Article 160 bis). No published decision applying Articles 125 to 128 was identified; the related-party disputes that do arise concern head-office charge caps, related-party interest and disallowed service fees.

Pillar Two and what changes in 2026

Royal Decree 70/2024, issued on 31 December 2024 and gazetted on 5 January 2025, enacted the Top-Up Tax Law for fiscal years beginning on or after 1 January 2025. It imposes a 15 per cent minimum through a domestic minimum top-up tax on Omani constituent entities and an income inclusion rule on Omani ultimate, intermediate and partially-owned parents, for groups with consolidated revenue of at least the OMR equivalent of EUR 750 million in two of the preceding four years. There is no undertaxed profits rule. KPMG's January 2025 alert describes the charge solely as an IIR whereas EY, PwC and BDO read the decree as also enacting a domestic top-up tax; confirm the mechanism against the Arabic text.

As at mid-2026 the Chairman's executive regulations, which will settle safe harbours, PE treatment, registration and return deadlines, had not been issued; BDO records only a public consultation on drafts between February and May 2026.

For transfer pricing the consequences are twofold. The GloBE computation starts from accounting profit that already reflects intra-group pricing, so an Article 126 adjustment, or a foreign adjustment accepted through MAP, flows into the jurisdictional effective tax rate. And with the headline rate already 15 per cent, top-up exposure arises mainly from incentives and the 3 per cent small-enterprise rate. Separately, Tax Authority Decision 180/2026 adds Article 18 bis to the Executive Regulation from tax years beginning 1 January 2027, but it governs only expenses incurred in implementing decisions of State administrative units and other public legal persons, which must be necessary for the activity and permitted by the Chairman; it does not touch intra-group charges. Oman has taken no position on Amount B and is not a covered jurisdiction under the Inclusive Framework commitment, so treaty partners need not respect an Amount B outcome for an Omani distributor, although Oman does appear on the OECD's section 5.3 qualifying-jurisdiction list for the data-availability mechanism.

How practitioners should respond

The absence of a documentation mandate is not an absence of risk; it shifts the contest from compliance to evidence. Prepare an OECD-format local file for every Omani entity with material related-party dealings, refreshed annually, so an Article 181 information request can be met within the time specified. Test related-party debt against the 2:1 equity ratio and head-office recharges against the Article 57 caps before pricing, since a defensible arm's-length figure can still be partly disallowed. Map every entity's control chain under Articles 132 and 133, including relatives to the third degree, to capture transactions between differently taxed Omani entities. Diarise the CbC notification for the last day of the fiscal year and, for Oman-parented groups, the report twelve months later. Where a foreign authority adjusts a transaction with an Omani affiliate, file the MAP request within three years; for domestic Article 126 adjustments, lodge the counterparty's Article 128 request within twelve months. Both windows close silently. Finally, watch for the Pillar Two executive regulations, which will impose the first registration and return obligations on large groups and may carry long-anticipated transfer pricing documentation rules with them.