Pursuant to Royal Decree (RD) 66/2019 establishing the Tax Authority (TA), His Majesty Sultan Haitham Bin Tarik Al Said issued RD 42/2020 on 31 March 2020 - promulgating the Organizational Structure of the TA. This RD includes a By-Law and is effective from the date of its issuance (31 March 2020).
Main highlights of RD 42/2020 include:
- The Head of the TA shall assume the powers prescribed to the Minister responsible for Financial Affairs under the Income Tax Law and the Excise Tax Law as well as any powers related to issuing exemption from income tax wherever they occur in regulations, systems and royal decrees.
- For matters not dealt with under the by-law, the current laws and RDs applicable to “Units of the State Administrative Apparatus” will apply to the TA.
- The TA’s headquarters will be in the Muscat Governorate. It is allowed to open branches in other governorates based on the decision of the Head of the TA.
- The By-Law outlines the TA’s key objectives, which include:
- Developing a tax system in line with approved tax policies
- Improving TA efficiency levels – particularly in the areas of tax assessment and collection
- Increasing tax awareness, as pertains to taxpayers’ rights and obligations
- Boosting tax compliance
In addition, certain key responsibilities have been assigned to the TA under the By-Law.
- Appointments of the Head (minister rank) and the Deputy Head (special grade) of the TA would be made by Royal Decree. In this regard, RD 70/2019 was issued on 14 October 2019, appointing H.E. Sultan bin Salim bin Said Al Habsi as the Head of the TA.
- The Head of the TA shall have responsibility for enforcing the Tax Law its Executive Regulations, and the By-Law now issued. The Head shall represent the TA before the courts and in dealings with third parties.
- Financial resources of the TA shall include:
- Money assigned to the TA under the State General Budget
- Fees collected by the TA in consideration of rendered services
- Any other resources prescribed by the Council of Ministers
- The TA will have its own budget, with a fiscal year of 1 January to 31 December of each year. The first fiscal year has been specified in the By-Law: 31 March 2020 to 31 December 2020.
- The TA shall be exempted from all taxes and fees without prejudice to the Common Customs Law for the Arab States of the Gulf
- The TA’s funds are to be deposited in a ‘special account’ at one or more licensed banks in Oman, following approval from the Ministry of Finance.
As you may be aware, the TA has re-designated its previous bank account, which is now in the name of “Tax Authority”. Further, it has changed its address to P.O Box 285, P.C 100.
Key observations on the TA’s new organizational structure:
- The Deputy Head of the Tax Authority position was introduced, which did not exist previously. The Deputy Head will report to the Head of the Tax Authority.
- The previous General Directorate of Assessment and Investigation (i.e., Large Taxpayer Unit, First Tax Department, Second Tax Department And Customs, Exemption And Withholding Tax Department) will now be split amongst two General Directorates (First and Second), reporting to the Deputy Head of the TA.
- The Department for Indirect Tax (value added tax and excise tax) no longer appears under the new structure. It seems that each of the above General Directorates (First and Second) will assume responsibility for this department under the new structure.
The issuance of this RD and the By-Law echoes the Tax Authority’s autonomous status, established last year, and enables timely tax policy changes. In fact, after announcing the new tax structure in October 2019, Oman has signed the Automatic Exchange of Information. In November 2019, the Multilateral Convention (MLI) was also signed which supports implementation of tax-treaty related measures to prevent Base Erosion and Profit Shifting (BEPS). Both tax policy measures were ratified through issuance of respective RDs (34/2020 and 43/2020) on 31 March 2020.
Given the pace of tax reforms, Oman may soon come out of the current EU blacklist, which is dampening foreign investments.
If you have any questions regarding the above, please do feel free to contact us.