Changes in timelines in the amended tax law
In the present dynamic tax environment, KPMG in Oman continues its initiative to provide its insights into important tax developments to the public at large, through a fortnightly series of articles contributed to the Times of Oman. In today’s article, we delve into some of the amendments made by Royal Decree 9/2017 (‘RD 9/2017’) in various timelines provided under the Income Tax Law promulgated under Royal Decree 28/2009 (‘the Tax Law’). Government has ushered in an era of self-assessment of tax returns. Going forward, only selective tax returns will be picked up for assessment by Tax Authorities, based on a risk criterion to be approved by the Minister Responsible for Finance. In line with this move, with a view to bring finality to the tax assessment sooner than in the past, the time limit for the completion of the assessment has also been reduced to three years (compared with the earlier period of five years) from the end of the year, in which the Final Return of Income (‘FRI’) is submitted. The amended law provides that in a case where three years have lapsed and the Tax Authorities have not completed the assessment, the tax position included in the FRI becomes final. Further, in cases of non-submission of FRIs, deception or fraud by a tax payer, the time limit for completion of the assessment would stand reduced to five years (as compared with the earlier period of 10 years).
RD 9/2017 provides that the above change is effective from February 27, 2017. In view of this, being a procedural amendment, a strict interpretation would mean that the assessment for the tax returns submitted in 2012 and 2013, if not already completed by February 27, 2017, would stand time barred and deemed to be completed in line with the FRI submitted by the taxpayer. However, the Tax Authorities are of the view that the above provision is applicable only to the tax returns being filed after February 27, 2017. Currently, there is no written confirmation or clarification from the Tax Authorities in this regard. We expect that these clarifications would be included in the Executive Regulations, which are expected to be issued in due course.
Timeline for issuance of decision on objection
RD 9/2017 provides that where an objection has been filed by a taxpayer against the assessment, the Tax Authorities are required to issue a decision within five months from the date of filing an objection. This due date is now extendable only up to a further period of three months (as compared to a further period of five months prior to the amendment), provided that the tax payer is notified of such an extension sought.
RD 9/2017 provides that the above change is effective from February 27, 2017. However, the Tax Authorities are of the view that the amended timeline is applicable only for such objections, which are filed after February 27, 2017. Hence, if a tax payer has filed an objection prior to Febru- ary 27, 2017, on which a decision is not issued as of February 27, 2017, it would be prudent for such tax payers to approach the Tax Authorities and seek a confirmation that the above understanding is correct and is applicable to the case. This is important because an objection is deemed to be considered as rejected on the expiry of the time limit for deciding an Objection, post which the appeal is required to be filed within 45 days. It would otherwise be a harsh outcome if the taxpayer misses this deadline in the confusion of when the objection decision is deemed to be rejected i.e. after eight months or 10 months from the date of its filing.
Notification of changes in taxpayer’s information
RD 9/2017 also stipulates that any changes in taxpayer’s information as recorded in the commercial register should now be notified to the Tax Authorities within 30 days from the date of change (Previously, the time line was 60 days). Such changes may include changes in the P.O. Box number, name of the Principal Officer, shareholders etc. Noncompliance of this requirement may result in adverse tax implications, such as rejection of the tax returns (if it is not signed by the Principal Officer whose name is appearing in the Tax Authori- ties’ records), non-receipt of tax correspondence causing delay in responding to the Tax Authorities. These adverse consequences may result in additional tax to be payable by the taxpayer.
Time line for refund of excess tax paid
Where the final judgment on a tax suit is issued in favour of a taxpayer resulting in a full / part tax refund to the taxpayer, the Tax Authorities are required to refund the amount due to the taxpayer within 60 days from the date on which the judgment is notified. This period is now extendable by another 30 days in necessary cases (prior to amendments, the extension was available up to 60 days).
On an overall basis, the reduced timelines for various tax compliance procedures area welcome step, as they are helpful to both the Tax Authorities and the taxpayer in maintaining the tax status up-to-date and in achieving a quicker finality to tax assessments and disputes. * The writer is a tax manager with KPMG in Oman, and has significant experience in dealing with tax advisory and compliance matters. The views expressed in this article, being the personal views of the author, are for information purposes only and should not be construed as a tax advice.