Taxation of international executives
Are there special residency considerations for short-term assignments?
There are no residency requirements for short term assignments, which are usually covered by the appropriate Business Visa. For medium or long term assignments, labor clearance and the appropriate visa, together with a Resident card will be required to be obtained.
Are there special payroll considerations for short-term assignments?
Oman does not have personal income tax so income tax withholding does not apply for individuals except for the withholding tax at the rate of 10 percent on the specified payments mentioned below.
Foreign persons including individuals could be subject to withholding tax at rate of 10 percent if payments representing income is realized in Oman to foreign persons not carrying on activities in Oman through a Permanent Establishment (PE). These payments include the following:
The term “income realized in Oman”, fundamental to trigger withholding tax provisions in the Sultanate, is now defined. As per the new definition, income would be considered as realized in Oman “whenever the source of such funds is from Oman”.
A list of “seven categories of payments” excluded from “fee in consideration of rendering services” for withholding tax purposes:
In regards to dividends, it has now been clarified in the amended ERs that withholding tax is applicable only on “dividends distributed by joint stock companies and investment funds in relation to investment instruments” and not by LLCs.
The term “interest”, for the purpose of withholding taxes, has now been defined to mean any amount received “because of loan” and includes income generated from bonds and sukuk (except those issued by government or Oman-based banks). The following payments have been specifically excluded from the definition of “interest” and have, therefore, in principle relaxed their withholding tax obligation in Oman:
Employers are required to pay a social security contribution equal to 18.5 percent of the salaries for its Omani employees only (not expatriates). Of this amount, 7 percent is recoverable from the Omani employees. The remaining 11.5 percent payable by an employer represents an amount equal to 10.5 percent of the monthly salaries of their Omani employees for social security (covering old age, disability and death); and 1 percent of the monthly salaries for industrial illnesses and injuries. The contributions are required for Omani employees between the ages of 15 and 59 who are permanently employed in the private sector. A unified system of insurance protection coverage is in effect for Gulf Cooperation Council (GCC) citizens working in other GCC countries/territories.
What income will be taxed during short-term assignments?
None for individuals except for the withholding tax at the rate of 10 percent on the specified payments mentioned above.
Are there any additional considerations that should be considered before initiating a short-term assignment in Oman?
There are no personal income tax implications for individuals in Oman, however, if an individual works for over 90 days in Oman, on the business of their overseas company and that company does not have a PE in Oman, then, a PE could arise by virtue of the employees presence in Oman over 90 days i.e. they could create a ‘service’ PE of the overseas company in Oman.
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