By Nour Ali, regional tax consultant at DNV, Dubai
On 7 July, the Oman tax authority published an announcement suspending the country-by-country local filing requirement until further notice. All relevant entities operating in Oman are required to continue to comply with all other obligations under the country-by-country reporting requirement.
Additionally, on 13 July, the Oman tax authority published an alert that clarifies the announcement made on 7 July and asserts that the suspension of local filing applies only to country-by-country reports filed by multinational enterprise groups with an ultimate parent entity outside of Oman. (Accordingly, the suspension does not apply to a multinational enterprise group with an ultimate parent entity inside of Oman). Moreover, the alert affirms that the country-by-country notification requirement shall continue to apply.
Country-by-country reporting requirement in Oman
On 27 September 2020, Oman introduced the country-by-country reporting requirements via Oman Tax Authority Chairman Decision No. 79 of 2020 by virtue of the Income Tax Law issued by Royal Decree No. 28 of 2009 and Royal Decree No. 24 of 2020 ratifying the Convention on Mutual Administrative Assistance in Tax Matters.
The country-by-country reporting requirements apply for reporting years beginning on or after 1 January 2020. As a general rule, the country-by-country reporting requirements apply to entities that are tax resident in Oman and are part of a multinational enterprise group with consolidated group revenues equal to or exceeding 300 million Omani Riyal (i.e., approximately USD 780 million) in the financial year preceding the reporting year.
The Chairman’s Decision requires local tax resident entities in Oman to submit a country-by-country notification if it is the ultimate parent entity or elected as a surrogate parent entity. If the local tax resident entity is not the ultimate parent entity or elected as a surrogate parent entity, then, it shall submit a country-by-country notification declaring the identity of the ultimate parent entity or the elected surrogate parent entity, which will submit the country-by-country report on behalf of the group no later than the last day of the reporting year of such multinational enterprise group.
Furthermore, the Chairman’s Decision stipulates a local filing requirement. Under this requirement, local tax resident entities in Oman (i.e., constituent entities) of a multinational enterprise group exceeding the threshold of 300 million Omani Riyal (which are not the ultimate parent entities or the surrogate parent entities) are required to submit a country-by-country report to the Omani Tax Authority under certain conditions specified in Article 3 of the Chairman’s Decision (i.e., when the Oman tax authority is unable to receive the country-by-country report from any other country through the automatic exchange of information).
Oman position on activated exchange relationships for country-by-country reporting
As per the latest update made on the activated exchange relationships for country-by-country reporting maintained by the OECD, Oman has activated exchange relationship with 27 countries. These exchange relationships are all non-reciprocal, meaning Oman will only send country-by-country reports to the 27 countries, it will not receive any country-by-country reports from them.
The existing non-reciprocal relationships became active starting from 1 January 2021. In that sense, the vast majority of multinational enterprise groups operating in Oman may have been required to undertake local filing of the country-by-country report in Oman.
In addition, according to the OECD’s handbook on effective implementation of country-by-country reporting, published 29 September 2017, in cases where the country can be construed as being a non-reciprocal country, local filing requirement shall not apply.
Concluding thoughts
The Oman tax authority’s suspension of local filing shall not apply to multinational enterprise groups with an ultimate parent entity in Oman. Such multinational enterprises are still required to fully comply with the country-by-country reporting, as well as the country-by-country notification requirement.
Multinational enterprises groups with an ultimate parent entity outside of Oman are still required to comply with the country-by-country notification requirement.
It is expected that further alerts and announcements might be communicated by the Oman tax authority to provide further guidance or to clarify certain elements with respect to the development of the situation surrounding the local filing requirement, as well as the non-reciprocal relationship status of Oman.
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