Muscat – The abolition of 10 per cent withholding tax on stock dividends and income from bonds and sukuk owned by foreign investors will boost foreign investment in the Muscat Stock Exchange (MSX) and enhance its competitiveness, according to the top capital market officials.
On the occasion of Accession Day, His Majesty Sultan Haitham bin Tarik issued Royal Orders to abolish the withholding tax on stock dividends and interest for non-resident investors.
H E Abdullah Salim al Salmi, executive president of the Capital Market Authority (CMA), said that the Royal Orders to cessate the application of tax deducted at source (TDS) on dividends and income from sukuk and bonds, to the advantage of foreign investors, affirms His Majesty’s keenness to provide all factors that enhance the investment environment and make the MSX an attractive investment destination for foreign capital.
“This will boost trading in the MSX, enhance its market capitalisation value, and boost the role of the capital market as a tool for financing economic projects as part of the efforts to achieve Oman’s Vision 2040,” he said in a press statement.
H E Salmi expressed the importance of the new Royal Order that stipulates the suspension of the withholding tax permanently with immediate effect, where appropriate legislative amendments are to be effected in due course.
“Such amendments shall ensure the exclusion of dividends and income from bonds and sukuk from the scope of this tax. This would enhance the confidence of foreign investors in the investment climate of the country, and reassure them that this tax will not be applied to their investments in the capital market in Oman,” he explained.
The executive president of the CMA noted that Royal Directive to permanently abolish the withholding tax on foreign investors are consistent with the national priorities directing the executive plans of the government agencies, which focus on attracting capital and encouraging investment.
The abolition of withholding tax gives the Omani capital market a competitive advantage to attract direct and indirect foreign investments, he added.
Oman’s government imposed a 10 per cent withholding tax on dividends and income from sukuk and bonds in 2017 as part of the Income Tax Law amendments. Although the withholding tax was suspended for a period of three years, starting from June 2019, which was later extended to 2025 as part of the economic stimulus plan approved by the Council of Ministers.
Haitham Salim al Salmi, CEO of the Muscat Stock Exchange said that the Royal Directives underscore His Majesty’s keenness on establishing an environment that stimulates foreign investments.
“The Royal Directives also reflect the policy of openness that Oman has espoused in dealing with foreign investment,” he said in a statement to Oman News Agency.
Salmi affirmed that, besides enhancing the attractiveness of the Muscat Stock Exchange, this step places the MSX comfortably in the global investment map and will constitute an incentive to attract more investments to the stock market.
He explained that the non-application of a withholding tax on dividends and interest will benefit non-resident foreign investors.
“Accordingly, the securities listed on the stock exchange will be more attractive to investors, especially since the share prices of most companies are still less than their fair value, as observed by analysts and experts in the financial market,” Salmi added.