Royal directive on withholding tax suspension welcomed

Royal Directives issued yesterday by His Majesty Sultan Haitham bin Tarik calling for, among other things, the suspension of withholding tax on the distribution of dividends and interest on non-resident investors, have been applauded by market experts.

This gesture will positively contribute to the increase in the volumes of the listed companies, which in turn will be reflected in the rise in the market value of the Muscat Stock Exchange, according to Amor Ahmad, Head of Brokerage – Ahlibank.

Speaking to the Observer, the financial analyst also noted that the timing of the Royal gesture will have a positive impact because it comes just ahead of the season of annual dividend distributions and the launch of large Initial Public Offerings (IPOs). A few subsidiaries and affiliates of Oman Investment Authority (OIA) are scheduled to be listed soon, starting with Abraj Energy Services, he said.

Importantly, the suspension of withholding tax will allow the foreign investor to invest directly and get profits without tax deductions, stressed Amor. He added nevertheless: “We hoped that it would be abolished in general, given the reluctance of some investors to (see a reimposition of) such a tax in the future. The suspension only with the possibility of re-imposing it again will not give the expected impetus, as in the case of cancellation, especially for the long-term investor,” he added.