Late morning, on 31 March 2020, an announcement was made by the Oman Tax Authority providing relief specifically to taxpayers affected by COVID-19 as a result of the precautionary measures imposed by the government to counter the pandemic in Oman.
These measures inter-alia include, deferral of tax return filing and payment of tax by up to three months from the due date, exemption from all fines and penalties related to such deferred filing and tax payments, and tax deductions for all donations or contributions made towards handling this pandemic in accordance with the prescribed rules under the income tax law and the executive regulations.
These are summarized below:
Tax return(s) filing and related tax payment deadlines extended by three months
- The Tax Authority has allowed deferral of tax return filing and payment of tax due as per the tax return by a period of up to three months for taxpayers who have been adversely affected by the COVID-19 pandemic as a result of the precautionary measures imposed by the government in Oman. This would mean that taxpayers who follow the calendar year as their tax year, for whom provisional tax returns were due on 31 March 2020, or those taxpayers whose tax year ended on 30 September last year and whose final returns were due on 31 March 2020, may now rely on this announcement. They may file the tax returns and pay related taxes on or before 30 June 2020, if not already filed and paid.
- Further, the announcement clarifies that no fines and penalties would be levied on such taxpayers who could not file their returns and pay the taxes within the prescribed due dates as a result of the precautionary measures imposed by the government in Oman to counter the COVID-19 pandemic.
Please note that the announcement seems to be limited to tax returns only and may not cover withholding tax statements which are due on the 14th of every month. It is further not clarified in the announcement if the deadline for filing the final return of income for taxpayers following the calendar year as their tax year has also been extended by three months. One should wait for the necessary clarification(s) to be issued by the Tax Authority in this regard.
Flexible tax payment mechanism introduced along with exemption from additional tax (interest) levy:
- Taxpayers may reach an agreement with the Tax Authority allowing the settlement of outstanding taxes in installments. This arrangement is likely to be ‘condition based,’ as will be agreed between the relevant taxpayer and the Tax Authority.
- Additional tax (interest) leviable of 1% per month on such outstanding taxes for cases governed by this arrangement will be exempt. Such exemption will be granted only upon satisfaction to the Tax Authority that tax settlement could not be made within the due date for reasons or circumstances resulting from the government measures imposed to counter the COVID-19 pandemic in Oman.
- Exemption from additional tax does not appear to be automatic. The onus or burden of proof lies on the taxpayer to justify with reasons or prove circumstances that resulted in delayed payment of taxes.
Deferment in filing of objection against assessment orders:
- As a brief background, the provisions of the tax law currently allow a taxpayer to object to the assessment order issued by the Tax Authority within 45 days from the date of receipt of the assessment order.
- For objection submission(s) [against assessment orders or rectified assessment orders or additional tax assessment orders] that are delayed as a result of the precautionary measures imposed by the government to counter the COVID-19 pandemic in Oman, the Tax Authority has clarified that such submission beyond the statutory period of 45 days will be permitted. The delay period will be treated as a ‘force majeure’ event, based on which such deferment would be granted.
- The onus once again lies on the tax payer to prove that the delay in submission beyond the statutory period for objection submission is due to the imposition of the government’s precautionary measures.
Additional timeframe granted to submit supporting documents and clarifications for ongoing objection proceedings:
- Taxpayers have been given the opportunity to request an extension to submit their supporting documents and clarifications for the ongoing objections proceedings. This request is subject to the approval of the Tax Authority.
- The additional time granted by the Tax Authority in such cases shall be ignored from the overall timelines for objection disposal by the Tax Authority [which is currently five months from the date of filing of the objection with an extended time of an additional three months if desired by the Tax Authority].
COVID-19 related donation(s) made tax deductible:
- The Tax Authority has clarified that donations or contributions made by taxpayers for the purpose of dealing with the COVID-19 pandemic in Oman will be treated as tax deductible. The onus or burden of proof is, once again, on taxpayers to prove that the purpose was for dealing with the COVID-19 pandemic.
- Such donations are to be governed by the same rules as have been already prescribed in the Executive Regulations to the Oman Tax Law and would be subject to the overall 5% of gross revenue capping.
The said extension is surely a welcome move by the government to provide relief to taxpayers who have not already filed their returns and who are adversely impacted by the current COVID-19 pandemic. We recommend our clients engage in discussion with the Tax Authority through their tax advisors to seek clarity on these announcements, wherever necessary.