The newly revamped Income Tax Law, amended by Royal Decree 118/2020, mandates the establishment of a ‘Tax Grievance Committee’ to adjudicate on appeals filed by taxpayers. According to KPMG, well-known multinational professional services firm, the Tax Grievance Committee replaces the ‘Income Tax Committee’ that has hitherto deliberated on appeals filed against the ‘objection’ decisions of the Head of the Tax Authorities. Tax appeals will also henceforth be referred to as ‘tax grievances’ under the newly amended law, the audit, tax and advisory services firm noted in an advisory circulated to clients.
“The Tax Grievance Committee shall be constituted by virtue of a decision of the Head of the Tax Authority following endorsement by the Council of Ministers. The composition of the committee continues to be the same: a Chairman, Deputy Chairman and three Members,” KPMG said, adding that the presence of two committee members in addition to the Chairman and/or Deputy Chairman will be compulsory to convene the Committee.
Significantly, a number of existing procedural provisions in the Income Tax Law related to the committee’s hearings have been scrapped.
“Royal Decree 118/2020 provides that a decision shall be issued by the Head of the Tax Authority to specify the work procedures of the Committee, convening its sessions, deliberation and adjudication procedures and manner of notification of decisions by the Committee. A decision on these matters is awaited from the Head of the Tax Authority,” it said.
In other amendments to the Income Tax Law, provisions have been introduced for the first time to establish the residential status of tax entities.
A ‘natural person’ is characterised as a resident of the Sultanate if they reside in the country for 183 days or more “continuously or intermittently” during the tax year in question.
A ‘juristic person’, on the other hand, is regarded as a resident of the Sultanate if it is either incorporated in Oman in accordance with the applicable laws and regulations or if the place of effective management is in Oman.
Notably, the reference to ‘foreign person’ has been supplanted with ‘Non-Resident’ in the amended law, specifically in relation to ‘withholding tax (WHT) provisions.
“This would imply that a foreign individual person staying in Oman for 183 days or more would be a “Tax Resident” in Oman and accordingly, should now not be made subject to the WHT provisions in Oman.
This is particularly relevant for passive income such as dividends or interest (which are currently under suspension until May 5, 2022),” KPMG explained.
“The concept of ‘residency’ is important to establish residence under Common Reporting Standard and also to avail benefits under tax treaties Oman has concluded,” the multinational services network further noted.
Other key amendments made to the Income Tax Law vide Royal Decree 118/2020 include enabling provisions to facilitate the Automatic Exchange of Information (AEOI) between tax jurisdictions.
Besides, it requires taxpayers to file only one tax return within four months from the end of the tax year. This is in place of the previous practice requiring taxpayers to file a provisional return of income within three months and an annual return of income within six months from the end of the accounting year.
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