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In pursuance to the series of reforms introduced by Oman to improve its tax policy framework, and taking necessary steps to activate its exchange of information relationship with all the EU member states, Oman has been removed from the EU blacklist as per the Council of the EU press release dated 6th October 2020. Oman is, therefore, no longer regarded as a non-cooperative tax jurisdiction by the EU Council.

 

Removal from the EU blacklist is a positive development and should boost inbound investment from European countries, which is important to uplift the economy in these unprecedented times.

 

Background:

  • The EU Council adopted the first EU blacklist on 5th December 2017, which included 17 non-EU countries or territories being reported as non-cooperative jurisdictions for tax purposes (“blacklist”). Substantial revisions took place in March 2019 (when Oman was first included in the list) and in February 2020 (when Oman continued on the list).
  • The EU list is essentially a tool to tackle tax fraud or evasion, tax avoidance, and money laundering.
  • The basis of inclusion of a non-EU country in the blacklist followed three criteria:
    Non-Transparency (i.e., not facilitating automatic exchange of information); Unfair Tax Competition (i.e., jurisdiction having a harmful tax regime) and non-implementation of Base Erosion and Profit Shifting (“BEPS”) minimum standards.
  • Oman has had a full-fledged corporate taxation regime for many decades; however, in the absence of a provision for automatic exchange of information and non-implementation of BEPS minimum standards, which Oman had agreed to implement as part of the BEPS Inclusive Framework, Oman was included in the EU’s blacklist on 12th March 2019.

 

Measures taken by Oman since 2019:

Oman has undertaken several measures towards implementation of BEPS minimum standards and to facilitate automatic exchange of information with a focus on increased transparency. These measures include:

  • On 26th November 2019, Oman signed the Multilateral Convention for implementing tax treaty-related measures to prevent BEPS, commonly known as the “Multilateral Instrument” or the “MLI”. On the same date, Oman 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)*.

Oman ratified the Convention on 25th March 2020 vide Royal Decree (RD) 34/2020 followed by ratification of the MLI on 31st March 2020 through RD 43/2020.

  • On 16th July 2020, Oman signed the Multilateral Competent Authority Agreement on the exchange of Country by Country Reports (CbCR).
  • On 20th September 2020, Oman amended its Income tax law vide RD 118/2020, inter-alia including provisions to facilitate automatic exchange of information. On the same day, Common Reporting Standard rules were issued by the Oman tax authority.
  • Finally, on 27th September 2020, rules for CbCR, being one of the actions in the four minimum standards, were issued by the Oman tax authority.

*Oman has committed its first exchange of information by 31st December 2020.