Interest income of expatriates in Oman not subject to withholding tax

25/04/2017 07:23 AST

Expatriates living in Oman can heave a sigh of relief as the government is not going to charge withholding tax on their interest income of their deposits in Omani banks.

Earlier, when the government amended the tax law, there was a general belief that the interest income of expatriates is also subject to withholding tax.

Overseas institutions

However, interest paid by financial institutions and companies to overseas institutions are liable to withholding tax at the rate of 10 per cent, according to Saud Nasser Al Shukaily, secretary general of taxation at the Ministry of Finance. He was addressing a seminar on amendments in tax law recently, which was jointly organised by the Oman Chamber of Commerce and Industry (OCCI) and Crowe Horwath Oman.

When the corporate income tax law was amended on February 27 by Oman government, the scope of withholding tax was enlarged to include service charges, dividends and interest income. Companies have already started debiting withholding tax on expatriates’ dividend income from listed companies. Companies have been paying dividend to shareholders for their 2016 net earnings since last month, after getting approval from annual general meetings.

Dividend

However, according to sources, those companies that had conducted their annual general meeting before February 27 need not have to debit withholding tax from dividends payable to expatriates. Dividends of all joint stock companies payable to foreign persons are liable for withholding tax at the rate of 10 per cent. Ministries and government institutions are also required to deduct withholding tax with the amendment. Another important change in the tax law is aimed at identifying the taxpayer since a tax card will be issued to all the taxpayers.

There is a relief for small Omani companies, which are liable to pay only 3 per cent, subject to certain conditions. The 3 per cent tax rate is available only to those Omani companies that has a capital of less than OMR50,000 and turnover of less than OMR100,000 and should not employ more than 15 workers. Micro units employing not less than two Omanis and run by an Omani entrepreneur as a full-time basis can enjoy zero tax rate.

And tax exemption has been limited to industrial companies up to a period of five years, while non-compliance with tax law requirements and tax evasion will be costlier.

Times of Oman