Obligations of Taxpayers Under the Income Tax Law

In 2009, Oman enacted Royal Decree No. 28/2009, which introduced the Income Tax Law and established a framework for taxpayer obligations in the Sultanate. As businesses and individuals engage with the Omani tax system, understanding these obligations becomes critical for compliance and the successful management of tax-related activities. This article outlines key obligations imposed by the law, particularly those stipulated in Articles 11 – 15 .

1. Tax Card Application (Article 11)

The law mandates that any taxpayer must submit a request  for a tax card to the Secretariat General at the time of incorporation or when obtaining a license to operate. This requirement is crucial for ensuring that all business activities are officially recognized and regulated. The application must adhere to a prescribed form and be submitted in accordance with the applicable laws and regulations.

Moreover, the Executive Regulations provide detailed guidelines on the issuance, amendment, or renewal of the tax card. These regulations encompass the information included in the tax card, its validity period, and the timeline for delivery. This framework helps maintain an organized tax registration process, ensuring that all parties are aware of their responsibilities.

2. Notification of Changes (Article 11)

Taxpayers are also required to keep the Secretariat General informed of any changes to their commercial or industrial registration details, particularly regarding their name and address. This notification must occur within 60 days from the date of incorporation or activity commencement whichever is earlier and within 30 days for any subsequent changes. Accurate and timely communication of such information is vital for maintaining up-to-date records and facilitating the effective operation of tax administration.

3. Accounting Standards (Article 12)

Article 12 emphasizes the necessity of preparing accounts based on the accrual basis of financial accounting, in line with international accounting standards. This requirement ensures consistency and transparency in financial reporting, which is essential for accurate tax assessment. However, taxpayers may request permission to use alternative accounting methods, subject to the approval of the Secretariat General.

4. Treatment of Expenses (Article 13)

In cases where taxpayers utilize an accounting method other than the accrual basis, any reference to expenses for a tax year will pertain only to the actual amounts paid during that year. This provision reinforces the importance of accurately tracking and reporting financial transactions to comply with tax obligations.

5. Foreign Currency Transactions (Article 14)

Taxpayers wishing to maintain their accounting records in a foreign currency must seek authorization from the Secretariat General. If approved, the computation of taxable income or losses for any accounting period must be converted to Omani Rials, based on the average exchange rates published by the Central Bank of Oman at the end of the accounting period. This regulation helps standardize currency conversions, ensuring that tax calculations are consistent and reliable.

6. Record Keeping (Article 15)

A significant obligation outlined in Article 15 is the requirement for taxpayers to retain all registers, accounting books, and relevant documentation for at least ten years after the end of the accounting period. This retention period is essential for verifying income and tax calculations during potential audits and for establishing a clear record of compliance with tax laws.

7. Tax Card Identification (Article 15 bis)

Finally, Article 15  mandates that every taxpayer must include their tax card number on all correspondences, bills, contracts, and related documents. This identification requirement streamlines communication with tax authorities and ensures that all transactions are traceable, further reinforcing accountability within the tax system.

Conclusion

Royal Decree No. 28/2009 and its stipulations impose critical responsibilities on taxpayers in Oman. By adhering to these obligations—ranging from applying for a tax card to maintaining accurate records and communicating changes—businesses and individuals can ensure compliance and mitigate the risks of penalties. As the landscape of taxation continues to evolve, staying informed about these obligations will empower taxpayers to navigate the regulatory environment effectively, fostering a culture of transparency and accountability in Oman’s tax system.

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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