October 15, 2020
Oman ratifies automatic exchange of information
Oman ratified, on 14 September 2020, the automatic exchange of information (AEOI) through Royal Decree No. 118/2020 (RD 118/2020) to support the implementation of the Common Reporting Standard (CRS) developed by the Organisation for Economic Co-operation and Development (OECD). On 17 September 2020, the Chairman of the Tax Authority issued Tax Authority Decision No. 78/2020 (TA Decision 78/2020) outlining related administrative rules.
The effective date for the CRS in Oman was 1 July 2019 and the first reporting is due by 31 October 2020 (based on a Circular issued by the Tax Authority on 4 October 2020). Reporting Financial Institutions (such as banks, funds, brokers, custodians and insurance companies offering cash value or annuity products) need to have processes and procedures in place to meet their compliance requirements. If these were not fully implemented in time for this year’s reporting, any necessary remediation should be carried out as soon as possible.
Individuals and entities that are not Reporting Financial Institutions should be prepared to provide relevant documentation to Reporting Financial Institutions to support their tax residency status.
The CRS is a standard developed by the OECD relating to automatic exchange of financial account information and requires jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. Oman is one of more than 100 jurisdictions that have committed to the CRS.
Automatic Exchange of Financial Account Information
Reporting Financial Institutions (RFIs) in Oman must undertake a comprehensive review of their pre-existing account holders (accounts maintained as of 30 June 2019) to identify account holders that are tax residents of the CRS participating countries who hold financial accounts, either directly or indirectly. Further, RFIs must identify any new account holders (accounts opened from 1 July 2019 onwards) that are tax residents of the CRS participating countries. All reportable account holders must be reported to the local tax authority on an annual basis with details of their address, tax identification number(s), date and place of birth (for individuals), account balances and depending on the type of the account details of interest or dividends paid, gross proceeds from the sale of redemption of financial assets and aggregate amounts of redemption payments made.
RFIs may apply the following procedures to perform their review:
Penalties for non-compliance
TA Decision 78/2020 does not stipulate any fines or penalties for non-compliance. Nevertheless, RD 118/2020 specifies that the Tax Authority may take all actions to obtain such information from the taxpayer.
The provisions relating to AEOI take effect from 21 September 2020, the day following the date when RD 118/2020 and TA Decision 78/2020 were published in the Official Gazette.
Entities and branches of foreign entities based in Oman will need to assess their classification under the CRS requirements to determine whether they are classified as RFIs and have reporting obligations under the CRS rules.
Individuals and entities not classified as RFIs should be prepared to provide the relevant documentation and self-certifications to RFIs to support their tax residency status.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLC, Muscat
Ernst & Young LLP (United States), Middle East Tax Desk, New York