MUSCAT, JUNE 15 – Oman is taking concrete measures to ensure that it fully complies with the Common Reporting Standard (CRS), a global standard developed by the Organization for Economic Cooperation and Development (OECD) to support the automatic exchange of financial account information. According to a high level official of the Secretariat-General of Taxation (SGT), which operates under the auspices of the Ministry of Finance, financial institutions in the Sultanate are mobilizing to implement the CRS in their respective organisations. At the same time, efforts are under way to upgrade Oman’s domestic tax regulations, as well as IT systems, to bring them into line with the standards prescribed under the CRS framework.
“We are making good progress in delivering on our commitment to implementing the Common Reporting Standard (CRS) in the Sultanate,” said Said Ahmed al Shanfari, Director of Tax Agreements. “To this end, the SGT has also been working closely with other regulatory agencies and stakeholder institutions, such as the Central Bank of Oman (CBO), Capital Market Authority (CMA), National Centre for Financial Information (NCFI), and Ministry of Finance, to ensure that all of the requisite laws and relevant agreements are formalized and signed before the end of this year.”
Designed to prevent offshore tax evasion, CRS requires financial institutions to identify customer tax residencies and report financial accounts held directly or indirectly by foreign tax residents to local tax authorities. It also obliges tax authorities to exchange this information in a transparent and regular manner. More than 100 countries, including all financial centres around the world, have committed to CRS.
In March this year, the European Union (EU) added Oman, along with a number of GCC and other international countries, to a blacklist of tax jurisdictions that had failed to implement CRS before a December 31, 2018 deadline. The Sultanate’s tax authorities had attributed the missed deadline to paucity of time, given the time-consuming and long-drawn nature of Oman’s legislative and legal systems.
Demonstrating its commitment to undertaking the first exchange in 2020, of financial information of the year 2019, the Tax Department invited representatives from all of the financial institutions operating in the Sultanate that fall within the ambit of the CRS framework, to a first-ever workshop on the Standard. The daylong forum, which was held at SGT’s Conference Hall on Wednesday, attracted more than 100 executives, said Al Shanfari.
“We invited the experts from the Global Forum on Transparency and Exchange of Information for Tax Purposes, Hakim Hamadi and Sivasankaran Pattanam, to deliver a series of lectures on CRS, its objectives, and the methodology for its implementation. This is their second visit to Oman this year. Representatives from the Global Forum were here earlier this year for meetings with the CBO, CMA, NCFI, and the Tax Department. Part of their role is to support Oman’s progress in complying with the criteria prescribed as part of CRS implementation.”
Headquartered in Paris, the Global Forum is the world’s leading multilateral body within which work in the area of transparency and exchange of information for tax purposes is carried out. The mandate of the Global Forum is to ensure a rapid and effective implementation of the standards on transparency and exchange of information for tax purposes.
As a first step in the implementation of CRS in the Sultanate, financial institutions have been instructed to ascertain the tax residency status of all account holders, whether belonging to individual, legal entities or ‘controlling persons’. This measure is being implemented in two distinct steps, the Director of Tax Agreements explained.
“In the first step, new accounts opened with effect from July 1, 2019 must also include a ‘Self-Certification Form’, which determines the tax residency status of the account holder. With regard to existing accounts (also known as ‘pre-existing accounts’), financial institutions are required to do due diligence and obtain the tax residency status of the account holders. This step will be initiated by all banks and financial institutions before the end of this year.”
Financial account information of account-holders that are not residents of Oman in terms of their tax status — also known as ‘reportable accounts’ — will be shared with any country with which the Sultanate has an agreement, according to the official. Safeguards built into the CRS framework ensure that any such information cannot be used for purposes other than those set out in the agreement, without the express consent of the Omani tax department.
Commenting on the next steps in the implementation of CRS, Al Shanfari said the SGT is developing the requisite legal and legislative underpinnings to support the smooth rollout of the Standard in the Sultanate. IT systems will also be tweaked to ensure ease in the sharing and exchange of financial account information between tax jurisdictions.
Al Shanfari also sees important benefits accruing to Oman and its economy from the implementation of a robust CRS in the Sultanate. “There are positive advantages to being part of a global standard on the sharing of tax information. In addition to possible improvements to tax revenues, being part of a transparent and harmonised tax compliance system gives comfort to international investors about the predictability of tax policies and tax administrations. Consequently, the issue of tax uncertainty — which can put off investors — is significantly diminished. This is also imperative to Oman’s goal of strengthening its business environment and investment appeal.”