Friday, March 23, 2012

Supreme Court Update: Omani Companies with Foreign Shareholdings Welcome Landmark Tax Judgment

We are pleased to share news of a judgment recently handed down by Oman’s Supreme Court in favour of two clients of Curtis, which we believe is of interest to the broader Omani business community.

The Supreme Court decided that Omani companies who have shareholdings in companies outside Oman should not have to pay tax on dividends received between the tax years 2002-2004 inclusive, which were the years under consideration. This decision overturned the earlier decisions of the Omani Primary and Appeal Courts in 2010 that these overseas dividends were taxable, pursuant to a 2004 Supreme Court judgment.

It is expected that the new written Supreme Court judgment will make it clear that the ruling also applies to the tax years 2000, 2001 and 2005-2009 inclusive.

The favourable Supreme Court judgments therefore imply that taxpayers who have received overseas dividends during the applicable years should not be taxed on this income if they have already disputed the charges or if their assessments are yet to be completed. (If they have already paid tax in respect of these years, they are deemed to have accepted their tax liability.)

Following the judgment, dividends paid in the applicable years to any Omani company on shareholdings in foreign companies will no longer be viewed as taxable income.

Needless to say, this is a very positive development for a broad range of Omani companies.