Are Foreign Dividends Taxable In Oman

The Oman Supreme Court confirmed an important principle relating to the tax treatment of foreign dividend income in Oman received by Omani companies.

The dispute started after the Oman Tax Authority argued that the tax exemption under Article 8 bis of the former Income Tax Law applied only to dividends received from Omani companies operating inside Oman. According to the Tax Authority, foreign dividends in Omanreceived from foreign companies outside Oman remained taxable.

The taxpayer argued that the wording of the law was clear and general, and that the exemption applied to dividends resulting from shares or participation in the capital of any company, whether Omani or foreign, and whether operating inside or outside Oman.

The Oman Supreme Court agreed with the taxpayer and confirmed that Article 8 bis was drafted in broad terms and did not contain any restriction limiting the tax exemption to Omani companies or companies operating in Oman.

The Court also confirmed that a clear statutory provision cannot be restricted or interpreted narrowly unless the law itself expressly provides such limitation. This ruling provides clarification on Oman Corporate Tax, foreign dividend taxation and the tax exemption under Oman tax law.

Based on this reasoning, the Supreme Court overturned the appealed judgment and confirmed the taxpayer’s right to benefit from the tax exemption on dividends received from foreign companies.

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