In what is billed as an effort to bolster the creation of a transparent tax environment in the Sultanate, the newly amended Income Tax Law makes it mandatory for licensed banks to share any financial information sought by the Tax Authority about specific customers — a requirement designed to ensure that Oman meets its commitments under various international tax-related agreements it has signed up to.
The measure is one of a string of far-reaching changes to the Income Tax Law, which was amended vide Royal Decree 118/2020 and which came into effect following its publication in the Official Gazette last week.
According to well-known professional services firm KPMG Oman, the amendments include enabling provisions to facilitate the Automatic Exchange of Information (AEOI) between tax jurisdictions.
“The Income Tax Law has been amended to empower the government to conclude bilateral and multilateral agreements and also join existing international agreements dealing with taxation matters.
This facilitates not only conclusion of bilateral or multilateral tax treaties but also allows automatic exchange of information’’, the firm said in an advisory sent out to clients last week.
Significantly, the amended law enables the collection of information and documents in line with Oman’s obligations under international pacts to facilitate the exchange of information with other tax jurisdictions, said KPMG.
Decision 78/2020 of the Tax Authority identifies ‘Reported Financial Institutions’ as ‘appointed persons’ who are responsible for collecting, keeping and submitting specified information to the Tax Authority within prescribed timelines.
In particular, commercial banks are obligated to furnish any customer information sought by the Tax Authority to ensure that Oman complies with its commitments under the AEOI provisions.
KPMG explained: “The Tax Authority is empowered to directly require licensed banks to provide information about any person for the purpose of adhering to international agreements dealing with taxation matters to which Oman is a signatory. Further, the licensed bank is not permitted to inform/notify its client about the same.”
The amendments vest the Authority with new powers to enforce these provisions.
Penalty provisions under the Income Tax Law have been amended to cover ‘appointed persons’, if they do not comply with the new provisions, according to the professional services firm. Additionally, the Authority is empowered to conduct ‘search proceedings’ at the concerned person’s premises to unearth the requisite information.
Importantly, the changes underscore the government’s commitment to fostering the growth of a robust and transparent tax environment in the Sultanate, says KPMG.
“The above amendments confirm the importance the government is giving to create a tax transparent environment in collaboration with other jurisdictions to identify arrangements or transactions resulting in tax avoidance,” it added.