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Transfer Pricing Regulations in Oman 2026: Penalties, Compliance Strategy & Audit Defence Roadmap

In today’s time, Transfer pricing has become a need of the hour, especially for multinational companies and local entities under foreign parent companies. For businesses planning company registration in Oman, understanding transfer pricing regulations is equally critical from day one. But why, and what does it refer to? Let’s understand here.

Transfer pricing is mandatory for managing cross-border transactions, along with avoiding tax disputes. Transfer pricing: the term refers to the rules for determining the price of goods, services, or loans between companies within the same group or related parties. The price of these transactions must be made between two completely separate entities.

In recent years, the Omani government has paid more attention to related party transactions. Concerning this, Oman introduced official Transfer Pricing rules and Country-by-country Reporting (CbCR) requirements effective from January 1, 2020. Oman is aligning its policies with the OECD guidelines and the BEPS initiative.

In this article, you will easily learn about the transfer pricing rules in Oman, the legal framework, and its implications for businesses.

An Overview of Oman’s Transfer Pricing Framework

Oman does not have a separate transfer pricing law. However, the country’s tax authorities closely monitor related-party transactions. This legal authority comes from Articles 27 and Article 28 of the Income Tax Law, empowering tax authorities to assess and modify the related-party transactions.

The Oman Tax Authority (OTA) closely monitors every transaction between related companies. It ensures compliance with the arm’s length principle. It is the foundation of Oman’s transfer pricing regulations. It requires the transaction between related parties to be as if it were between two independent parties. In many cases, companies can artificially set prices to understate profits or pay less tax.

Transfer Pricing in Oman

Get the status for the essential particulars given in the table for the transfer pricing in Oman:

Particular	Status in Oman
Dedicated TP law	Not yet
Arm’s length rule	Yes
OECD alignment	Increasing
Documentation filing	Not mandatory
Audit window	10 years

Legal Framework for Oman’s Transfer Pricing

This section highlights the legal framework for Oman’s transfer pricing, covering regulatory authorities, compliance standards and more. See below:

1. Royal Decree 28/2009 – Income Tax Law

The foundation of transfer pricing in Oman is the Income Tax Law enacted pursuant to Royal Decree 28/2009. Articles 27 and 28 of this law empower the tax authorities to examine related party transactions.

If the OTA considers that a transaction does not comply with the arm’s-length principle, they can adjust the value of that transaction and reassess the taxable income. The law also has extensive anti-avoidance powers. These are used to prevent tax evasion.

2. Royal Decree 121/2020 and Ministerial Decision 79/2021

Royal Decree 121/2020 and Ministerial Decision 79/2021 added some auxiliary transfer pricing elements. Although these are primarily related to the VAT system, the OTA still uses them as a reference in many cases. So, the tax authorities can now use more information to verify the true value of the transaction.

3. Impact of OECD and BEPS

Oman is aligning its tax system with the OECD guidelines and the BEPS (Base Erosion and Profit Shifting) framework. Its main goal is to stop the tendency to artificially shift profits or understate taxes.

International tax treaties and information exchange systems are also being strengthened. More detailed transfer pricing rules are likely to be introduced in Oman in the future, so businesses should be prepared now.

Important updates on Oman’s Transfer Pricing Compliance for 2026

Oman is moving closer to international tax standards in 2026. So, the importance of transfer pricing compliance has clearly increased.

Global Minimum Tax

A 15% global minimum tax has come into effect in Oman from 1 January 2026. It applies to multinational groups with global revenues exceeding €750 million. This rule will have a direct impact on the tax planning and profit distribution strategies of large groups. Its integration with transfer pricing analysis is now important.

E-Invoicing Rollout

E-invoicing is being rolled out in stages from August 2026. This will increase the transparency of transactions. Intercompany transactions will now be easier for tax authorities to track. Mispricing or discrepancies will be more likely to be detected quickly.

Increased compliance with BEPS

Oman is updating tax treaties and strengthening international information exchange systems. This progress with the BEPS framework indicates that more stringent transfer pricing rules will be introduced in the future. So, businesses should prepare now.

Understanding the Arm’s Length Principle for Oman’s Transfer Pricing Regulations

The Arm’s length principle is the cornerstone of Oman’s transfer pricing system. The prices of transactions between two related parties should not be related to each other.

The Oman Tax Authority (OTA) compares the transaction to the price prevailing in the market between similar independent parties. If the price is found to be abnormal or artificially determined, the authority can adjust it.

In this case, the company’s taxable income may be recalculated. So, it is very important to determine the correct price and prepare documentation to reduce tax risks.

Acceptable Transfer Pricing Methods in Oman

Oman generally follows OECD-accepted transfer pricing methods. There is no strict hierarchy of methods. Businesses have to choose the most appropriate method according to their circumstances.

A company needs to consider its activities, risks, assets, and comparative market information to choose the right method. OTA examines this analysis during an audit.

So, it’s not enough to just choose a method but more essential to have economic analysis and benchmarking. Using reliable comparable is especially important for multinational organizations.

Common Transfer Pricing Methods and their Uses

Here is a table highlighting the common transfer pricing methods and their uses. Know the methods to ensure an arm’s length pricing and tax compliance globally,

Method	Best Used For
Comparable Uncontrolled Price (CUP)	Direct comparable
Resale Price Method	Distributors
Cost Plus Method	Manufacturers/service providers
Transactional Net Margin Method (TNMM)	Routine entities
Profit Split Method	Highly integrated businesses

Country-by-Country Reporting (CbCR) Requirements

CbCR applies to large multinational (MNE) groups. Groups with a combined annual revenue of OMR 300 million or more in Oman are required to comply with this rule.

The main conditions are:

• Notification of the reporting entity must be given by the last day of the relevant financial year
• The CbC report must be submitted within 12 months of the end of the financial year
• Local filing is currently suspended for groups headquartered abroad (under certain conditions)

Practical compliance tips:

• Check the group structure in advance
• Confirm which entity is responsible for reporting
• Keep a calendar tracking to avoid missing deadlines
• Collect supporting data in advance
• CbCR compliance is much easier with proper planning.

Documentation and Record Keeping Requirements in Oman

Transfer pricing documents are not mandatory to be filed with the income tax return in Oman. However, the Oman Tax Authority (OTA) expects companies to prepare and maintain relevant records. These documents become very important during audits to ensure scrutiny. Also, it is gradually tightening its procedures with the global trend of increasing international tax transparency.

Required Documents for OTA:

• Intercompany agreements
• Functional analysis
• Benchmarking studies
• Financial data and supporting accounting information

If this evidence is not appropriate, the OTA may question the value of the transaction.

Master File and Local File (Best Practice)

Although not required by law, master files and local files are increasingly expected for large multinational groups. This is consistent with the OECD-style documentation approach. Having these files ready in advance makes it easier to explain during an audit.

10-Year Enquiry Period

The 10-year enquiry period in Oman is a major compliance risk. OTAs can also examine old transactions. So, it is very important to maintain accurate and complete documents for a long time.

Scope of Related Parties in Oman’s Transfer Pricing

In Oman’s transfer pricing, it is first seen whether there is a relationship between the two parties. Usually, the direct or indirect control test is used. If one organization controls the other directly or indirectly, then they will be considered a related party.

In addition, if there is 50% or more common ownership between two organizations, then they are also considered related parties. A Permanent Establishment (PE) of a foreign company also falls under this.

Family relationships are also taken into account. Even if there is a third degree of kinship (such as grandparents, grandchildren, or siblings), a related party can be considered. This rule applies to both domestic and international (cross-border) transactions.

Transactions Covered under Oman’s Transfer Pricing

• Intercompany Sale or purchase of goods
• Provisions of management or technical services
• Royalties and intangibles
• Intra-group loans and financing arrangement
• Cost allocations

Implications for Businesses in Oman’s Transfer Pricing

Transfer pricing in Oman is no longer just a matter for large multinationals; it is also important for small local companies. So, it is very important to set a benchmark in advance. This will help businesses understand whether the transactions are in respect with the market prices.

Companies that do not have proper documentation are at greater risk during an audit. The following companies need to be more vigilant:

• MNE subsidiaries
• Free zone entities
• Service fee and royalty payment companies

Regular TP reviews can quickly catch errors or discrepancies. It also helps in audit readiness and protects a business from major tax risks.

Penalties and Consequences of Non-compliance in Oman’s Transfer Pricing

Non-compliance with Oman’s transfer pricing rules poses financial and legal risks for businesses. The main consequences are given below:

• OTAs may adjust transaction prices
• Additional taxes may be levied
• 1% interest per month on outstanding taxes
• Underreported taxes may be subject to penalties ranging from 1% to 25%
• Late filing of returns may result in an administrative fine of approximately OMR 1,000
• OTAs often conduct audits for multiple years at once

Proper documentation, regular reviews, and timely reporting are crucial to avoiding these risks.

Conclusion

The transfer pricing framework in Oman is changing rapidly, and tax authorities are now paying more attention to related party transactions. Although there is no separate TP law yet, audit scrutiny is clearly increasing.

So, the safest path for businesses now is to create proper documentation, benchmarking, and compliance systems in advance.

Enterslice can help you with a complete TP study, Master and Local File preparation, CbCR support, and strong audit defence. In addition to this, we will help you in meeting the requirements of tax and accounting compliance in Oman. Get expert help today and protect your business from future tax risks.

FAQs on Oman’s Transfer Pricing Regulations