Understanding the Obligations of Taxpayers Under Oman’s Income Tax Law

The Royal Decree No. 28/2009, which outlines Oman’s Income Tax Law, imposes several obligations on taxpayers to ensure compliance and maintain transparency. These obligations, defined under Articles 11 to 15 bis, establish a robust framework for tax administration and reporting. Here’s a detailed overview of the key requirements taxpayers must adhere to:

1. Tax Card Requirement (Article 11)

Taxpayers are required to obtain a tax card when initiating their business operations. This involves:

• Submitting a request to the Secretariat General during the incorporation process, while obtaining licenses, or when registering with commercial, industrial, or professional bodies.
• Using a prescribed form for the application.

The Executive Regulations provide guidelines for issuing, amending, or renewing the tax card, including its validity, data requirements, and delivery timeline. Non-compliance with these provisions could lead to penalties as per Article 201 of the Law.

Taxpayers must also notify the Secretariat General of their official data, including any changes to business name, address, or other information, within:

• 60 days of incorporation or commencement of activity, whichever is earlier.
• 30 days from any subsequent changes.

2. Preparation of Accounts (Articles 12 and 13)

Taxpayers are obligated to prepare their accounts in accordance with:

• Accrual basis of financial accounting, adhering to international accounting standards or equivalent criteria as prescribed by the Secretariat General.
• Exceptions may be granted to use alternative accounting methods upon approval from the Secretariat General, provided these methods align with prescribed standards.

When accounts are prepared using a basis other than the accrual method, references to incurred expenses in a tax year must relate to expenses actually paid during that year.

3. Maintaining Records in Foreign Currency (Article 14)

Taxpayers may maintain books of accounts and registers in a foreign currency only with authorization from the Secretariat General.

• Taxable income or losses must still be calculated in Rials Omani.
• Conversion to Rials Omani should be based on the average exchange rate published by the Central Bank of Oman at the end of the accounting period.

4. Retention of Records and Documents (Article 15)

Taxpayers must retain:

• Registers, books of accounts, and supporting documents for at least ten years from the end of the accounting period.

These records are crucial for:

• Preparing income tax returns.
• Determining taxable income and supporting any claims made in the tax filing.

5. Tax Card Number Usage (Article 15 bis)

To enhance traceability and compliance, taxpayers must prominently display their Tax Card Number on:

• All official correspondences.
• Bills, invoices, contracts, and other relevant documents.

Key Takeaways for Taxpayers

Compliance with Oman’s Income Tax Law is essential for businesses to avoid administrative penalties and ensure smooth operations. Here are actionable steps for taxpayers:

• Apply for a tax card promptly during incorporation or registration.
• Keep the Secretariat General updated on any changes in business data.
• Prepare accounts in accordance with international standards or approved methods.
• Retain all financial records and supporting documents for a decade.
• Display the Tax Card Number on all official documents to align with legal requirements.

Conclusion

The obligations outlined in Articles 11 to 15 bis of the Income Tax Law emphasize transparency, accountability, and proper documentation. By adhering to these provisions, taxpayers contribute to a compliant and efficient tax ecosystem in Oman.

Taxpayers are encouraged to consult tax professionals or legal advisors to ensure they meet these obligations effectively and address any challenges related to compliance.

summary

Oman’s Income Tax Law (Royal Decree No. 28/2009) outlines key obligations for taxpayers, including the requirement to obtain a tax card during business incorporation or registration, notify the Secretariat General of any changes to business details, and maintain accounts using accrual accounting or an approved alternative. Taxpayers must retain financial records for at least ten years and display their tax card number on official documents. Compliance with these provisions ensures transparency and avoids penalties, contributing to a smooth and efficient tax administration in Oman.

Disclaimer: The Content offer general guidance and should not be considered legal, financial, or tax advice. Consult qualified professionals for personalized guidance. While efforts have been made to ensure accuracy, no guarantee is provided for completeness or applicability to individual situations. Users are responsible for their interpretation and actions based on this information, at their own risk.

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