Oman Seeks Alignment of Thin Capitalization Rules under Income Tax Law with OECD/G20 BEPS Action 4

The Sultanate of Oman Tax Authority’s is proposing to modify the current Omani thin capitalization rules. These rules, under the Income Tax Law, could see changes inspired by recommendations in the OECD/G20 Base Erosion and Profit Shifting (“BEPS”) Action 4 Final Report. Oman aims to update its legislation and enhance transparency under its income tax system, as well as avoid profit shifting using excessive leverage. The proposed changes are expected to impact how businesses, especially MNEs, handle financing – whether through equity or debt.