Article 127 provides for 'Corresponding Adjustments' to ensure fairness after a transfer pricing audit. If the Tax Authority adjusts the income of one person (the first party) under Article 126, it may also adjust the taxable income of the other party involved in the same transaction. This prevents double taxation of the same profit; if one party's income is increased, the other party's related expense or income should be adjusted consistently. This maintains symmetry in the tax treatment of the transaction across both Omani taxpayers involved in the related-party deal.
Part 4 - Avoidance of Double Taxation
Chapter 2 - Tax Avoidance between Persons or By Entering into Transactions
Section 1 - Cases of Avoidance between Related Persons
Article 127
[GTL Notes: Related Person Corresponding Adjustments]
In case of application of the provisions of the foregoing Article 126 for computing the taxable income of a person with whom the transaction has been made for a specific tax year, the Authority may compute the taxable income of the other person with whom the transaction has been made - in respect of the transaction on which the provision of the foregoing Article 126 has been applied - in accordance with the basis adopted in the application of the provisions of that Article.
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