Crowe Oman calls for strict compliance to tax law

MUSCAT: Tax is a complicated legislation worldwide and paying tax makes it tougher, however, in Oman, the tax law is simple, Davis Kallukaran, managing partner of Crowe Oman said while welcoming the delegates to the tax workshop organised by Crowe on Wednesday.

The scope of withholding tax was widened by Tax Law made by Royal Decree 9/2017 to cover, certain payments like fees for services, dividends from joint stock companies and interest payments made to foreign companies and persons.

The highlight of the workshop was the relief that taxpayers were given using Executive Regulations (ER) recently. Tax managers, finance managers and finance executives of many Omani and foreign companies participated in the workshop.

“During the last two weeks, two major headlines in the Oman newspapers captured my attention. The first one was that the Omani budget deficit has come down by 20 per cent in the last nine months of this year to OMR1.5 billion,” Davis said in his address.

“Out of the total revenue, 10 per cent, ie almost OMR800 million is contributed by custom duty and corporate taxes.

Corporate tax collection has gone up by around 25 per cent in the past nine months to touch OMR580 million and another OMR162 million from custom duty,” he added.

“There has not been any change in the corporate rate in the last two years. In spite of the economic slowdown, the increase in tax collection is only due to the tightening of tax administration. The mindset of tax collectors have changed in the recent past. The skillset of the people have increased significantly and scores of queries are being raised before an assessment is completed unlike in the past,” Davis said.

The government is also tightening the corners and a new tax authority has been formed. Preparations are on the way to introduce a value-added tax (VAT) regime by the last quarter of 2020 or early 2021.

The second headline in the newspapers was the signing of the OECD BEPS multinational convention by the sultanate. This is a significant milestone in history. The Organisation of Economic Development and Cooperation (OECD) has drafted the Base Erosion and Profit Shifting (BEPS) multilateral convention.