We have the opportunity to provide a Contract manager to a company in Oman for 6 months. Can anyone advise if this can just be done as a straight contract between our limited company in the UK and the company in Oman or if we have to register with the Omani authorities, set up a branch office or any other such process. The Omani company’s client is a government department. This opportunity may lead to other work but at the moment we do not want to over complicate matters unless absolutely necessary. Any guidance would be greatly appreciated.
In contract terms you can have a contract between your UK company and the client.
You can choose to register with the Omani authorities as you’ll create a permanent establishment which would potentially expose the earnings on the Oman project to tax at 12%. Alternatively the Omani client could withhold tax at 10%. I believe these can be offset against UK taxes under the Dual Tax Treaty between UK and Oman.
But the more pressing issue may be getting your Contract manager into Oman for 6 months -you will need your client to organise the work permit directly, or else you will need a local sponsor.
Thank you for confirming that Promata can have a contract with a company in Oman, I assume this is without setting up a branch office or PE or registering in Oman as a trading company. I thought this would be the case as we had a similar contract several years ago with a company in Dubai and did not need to register in anyway.
Having confirmed that, our intention now is to speak with HMRC regarding the Corporation tax issue. As you rightly say we could be liable to 12% in Oman, this is also supported by an article we found on the web from what appeared to be an knowledgeable source which stated
“Foreign businesses that provide periodic consultancy or other services in Oman, either through their own employees or designated agents, need to be aware that aggregate periods of 90 days or more spent in Oman in any 12-month period will create a permanent establishment for the purpose of liability to corporate tax”
We would fall into the foreign business providing periodic consultancy for a period greater than 90 days so would therefore appear liable to 12% Omani tax on revenues generated through that contract.
Regarding your last point we have already agreed that the client will be dealing with all matters relating to Visa’s and private health insurance for the Contract Manager whilst in country.
Thank you again for your advise and assistance, if my comments above have raised any other points you think relevant please let me know.
I believe you can decide whether to declare a PE in Oman and pay the tax at 12% OR have your client withhold tax at 10%. You might be able to build that 10% into the charge rate to the client?