Tax relief measures
The following corporate tax relief measures were announced by the government on 31 March 2020:
- 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
- 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.
- Other measures include flexible tax payment mechanisms; extension of timelines for filing objections against tax assessments; and additional time to submit supporting documents and clarifications for ongoing objection proceedings. Refer to our Tax flash for further details.
In addition to above, other tax measures announced by the government included:
- Exemption from tourist and municipality tax (applicable at 4%) for restaurants until 31 August 2020
- Exemption from municipality tax (applicable at 5%) for commercial establishments until 31 August 2020.
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].