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Legal issue
An expense may reduce a company’s gross income only if it is actual, genuine, necessary for earning income and directly linked to income of the relevant tax year.
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Published principle
The Arabic text published by the Supreme Court is the primary source. The English translation was published by the Technical Bureau; Russian and Chinese are unofficial Smart Global Capital editorial translations.
This is a published legal principle—an extract selected by the Supreme Court of Oman Technical Bureau—not the full text of the judgment.
No costs may be deducted from a company’s gross income unless they are actual, genuine, necessary and essential for generating its income, with the expense directly linked to income during the tax year. In the circumstances considered, attorney fees did not directly preserve or protect income and therefore did not qualify as deductible expenses.
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Applicability
This is not a categorical prohibition on deducting legal fees: their purpose, income nexus and supporting evidence require a factual assessment. The Income Tax Law and Executive Regulation must be checked in the version applicable to the relevant tax year.
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Related instruments
- Income Tax Law, Royal Decree No. 28/2009
- Income Tax Law Executive Regulation
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