Tax flash: Oman implements international tax reforms

Tax flash: Oman implements international tax reforms

On 26 November 2019, Oman signed the Multilateral Convention (MLI) to implement tax treaty related measures to prevent Base Erosion and Profit Shifting (BEPS), making the total signatories 92 jurisdictions globally. This step marks an important milestone in Oman’s commitment to tackle tax treaty abuse, improve the coherence of international tax rules and ensure a more transparent tax environment. In addition, Oman also signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (the Convention) and the Multilateral Competent Authority Agreement‎ on Automatic Exchange of Information Agreement (CRS MCCA) to enable the automatic exchange of financial information on a reciprocal basis with other jurisdictions.




What is MLI?

MLI is a common agreement between various jurisdictions which allows them to swiftly integrate the BEPS inspired tax treaty changes into their existing networks of bilateral treaties. Such changes may cover a range of tax treaty matters, such as: treaty abuse, artificial avoidance of permanent establishment, hybrid mismatch arrangements, dispute resolution, dual residence, transparent entities, withholding taxes and capital gains tax. The MLI allows a signatory to indicate those of its treaties (referred to as Covered Tax Agreements or CTAs) to which the MLI shall apply.

Implications for Oman by signing MLI

To date, Oman has tax treaty with 35 jurisdictions. Oman submitted a list of 34 treaties to be designated as CTAs (the tax treaty with India is currently excluded). Oman has also provided its draft list of reservations and notifications (MLI positions) with respect to the MLI provisions.
These positions may be subject to change and the definitive outcome will be provided upon the ratification of the MLI by Oman through a local legislation. The specific change in Oman’s tax treaty with a particular jurisdiction is also dependent on the counterparty jurisdiction signing the MLI and their status on the MLI positions.

Our view on MLI

The signing of the MLI is an important development for Oman’s tax treaty network. Multinationals operating in Oman need to review their holding, financing and operational structures to ensure that they remain relevant in light of current and potential business needs and BEPS developments. New investments into, from or via Oman will need to take into account the expected changes.

Convention and CRS MCAA

Oman had committed to implementing the Common Reporting Standard (CRS) regulation to enable automatic exchange of financial information with other jurisdictions. Earlier this year, banks and other financial institutions had been mandated by the Central Bank of Oman to ensure collection of CRS-related information for new account holders effective from 1 July 2019. Consequent to this, Oman has now signed up to the international framework.
It is expected that the first set of exchange by Oman will be done by September 2020. We further expect that Oman’s local legislation will soon allow specified institutions to undertake CRS compliance with the designated authority.
The signing of the Convention and the MCCA should assist Oman to be excluded from the current European Union blacklist.

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