Oman banks gear up to implement OECD norms on tax status of account holders

MUSCAT, JUNE 10 – Commercial banks and financial institutions in the Sultanate are being mandated to certify the tax residency status of all account-holders in the Sultanate — individuals, businesses and organisations of all kinds — in line with Oman’s commitments to the Organisation of Economic Cooperation and Development (OECD). According to a Muscat-based tax expert, the Common Reporting Standard (CRS) introduced by the OECD obliges tax jurisdictions around the world to share and exchange financial information of taxpayers as part of a bid to tackle cross border tax evasion.
“Oman is preparing to comply with the Common Reporting Standard, which is essentially a framework for the automatic exchange of financial account information of individuals and entities operating in the Sultanate, as well as data pertaining to their tax status,” said Alkesh Joshi (pictured), Partner — Tax Services, EY Oman. “In line with these commitments, commercial banks, non-banking financial corporations and other financial institutions will require new account-holders to declare their tax residency status when they open new accounts effective from July 1, 2019. Existing account-holders will be given until the end of the year to update their tax residency position,” Joshi told the Observer.
Earlier this year, the European Union (EU) had added the Sultanate to an ‘EU tax blacklist’ of jurisdictions that had failed to introduce and implement the Common Reporting Standard within a stipulated deadline — a decision that Omani authorities deplored as ‘regrettable’. Oman had sought a grace period to meet the complex criteria underpinning the CRS framework, but failed to get the EU to relax its deadline.
In the event, the Sultanate now has until the end of this year to bring its tax regime into compliance with the OECD’s Common Reporting Standard. To this end, the Secretariat General of Taxation (SGT) of the Sultanate, which is the competent authority to administer the new Common Reporting Standard, is hosting a first-ever workshop on the new framework for the benefit of banks and financial institutions operating in Oman. The day-long event, which will be held at SGT’s premises in Muscat, is being organised in cooperation with The Global Forum on Transparency and Exchange of Information for Tax Purposes.
“In line with its commitments under the Common Reporting Standard framework, Oman will start sharing financial and tax-related information with the EU starting from 2020 onwards,” said Alkesh.
“This means that, per CRS criteria, local banks and financial institutions must start the process of capturing financial and tax related information about their account-holders at least six months prior to the 2020 timeline. On the assumption that the compliance process will start on January 1, 2020, the organisations will be required to start capturing the data by July 1, 2019. Indeed, many licensed banks have started the process, based on guidelines already provided to them by Oman’s tax department and the Central Bank of Oman (CBO),” the tax expert, who has been tapped by a number of financial institutions for CRS consultancy, explained.
The Sultanate continues to make major strides in modernising its regulatory and legislative systems to bring them into line with international standards as part of a wider push to enhance Oman’s appeal as a destination for investment and business. These efforts have picked up pace in recent years, as exemplified by the enactment of a flurry of new laws and statutes, as well as those in the pipeline, all designed to boost the Sultanate’s rankings on the Ease of Doing Business Index.