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14 March 2018 Oman's Tax Authority declares withholding tax applicable on all payments to foreign persons for services, regardless of place of performance Oman's Secretariat General of Taxation (SGT) issued a letter, on 4 March 2018, notifying the Tax Authority's position with respect to the applicability of withholding tax (WHT) on services provided by foreign persons. The SGT has stated that WHT is applicable on all payments made to foreign persons for services provided regardless of where the services are performed. The current position taken by the SGT is a reversal of certain clarifications provided by the SGT pursuant to the issuance of Royal Decree 9/2017, wherein it stated that WHT on foreign services was to apply only to services performed in Oman. The effective date of the above position is currently uncertain, i.e., whether the above position will apply retroactively from the effective date of RD 9/2017, which came into effect from 27 February 2017 or from the date of the SGT's letter, i.e., 4 March 2018. Furthermore, if WHT on services is determined to be applicable retroactively, it is uncertain whether delay fines will be levied on such WHT payable. All foreign service providers should review their tax position in relation to services provided to customers in Oman on or after 27 February 2017. Local taxpayers contracting services from foreign persons should also examine whether they are contractually liable for any WHT liability that may arise following this notification.
Document ID: 2018-5410 |
