Oman is the second country of the Gulf Cooperation Council (GCC) to join the BEPS framework of the OECD. The BEPS framework is the acronym of Base Erosion and Profit Shifting initiative. This initiative is on the lookout for curbing painful taxation procedures.
The Sultanate of Oman is the 104th country to join this prestigious council. The BEPS framework aims to curb the taxation and present the following steps:
- Measures against harmful tax practices (Action 5)
- Model provisions against treaty abuse (Action 6)
- Transfer Pricing documentation and Country-by-Country Reporting (“CBCR”) (Action 13)
- Enhancing dispute resolution through Mutual Agreement Procedure (“MAP”) (Action 14),
This step will lead to the alteration of the Oman tax law, and Oman has to revise its tax framework to include these four steps. Oman also has to provide inputs and recommendations to BEPS council and pay an annual fee. The joining of Oman in the BEPS is predicted to bring some changes in the Oman tax law system.
Experts are expecting changes in the following areas:
- The Omani authorities will increase their focus on the benefits before signing any treaty or providing any benefit for the citizens or tax exemption for the foreign entities.
- At present, Oman tax law has provisions in Transfer Pricing, but the Omani authorities are lax on the filing of on any credentials. The rules allude to the point that the trades should be at Arm’s Length price. Nevertheless, the Omani tax authorities are partial to the fact that the Taxpayer has to provide detailed TP documentation during the assessment proceedings. With the more significant emphasis on TP as part of the BEPS measures, and CBCR (Country by Country) as one of the necessary standards, it is likely that requirement of correct credentials may be introduced in Oman tax laws.
- Oman should work closely with other affiliate countries to monitor the execution of BEPS. This action will enable the taxpayers to have access to adequate and practical dispute resolution mechanisms under bilateral tax treaties.
- More comprehensive disclosures to ensure clearness.
- Supplementary compliance requirements.
In due course of time, Oman might also issue judicial modifications emphasizing the timelines about submissions, the extent of legal changes and the hands-on need to, prioritize the BEPS measures and implement these measures before the official announcement.Therefore, it is a prudential move for the entities in Oman to start preparing for the impact that might arise from the effect of BEPS instead of waiting for the formal announcement.
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