Oman has joined the BEPS Inclusive Framework | KPMG | OM

Oman has joined the BEPS Inclusive Framework

Oman has joined the BEPS Inclusive Framework

Oman has recently joined the BEPS Inclusive Framework bringing the number of countries participating in the BEPS Project to 104. Oman is the second country after Kingdom of Saudi Arabia (“KSA”) in the Gulf Co-operation Council (“GCC”) region to sign the BEPS.

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The list of the member countries (including Oman) from OECD can be found here.
The countries (including Oman) that are members of the BEPS Inclusive Framework agree to remove harmful tax provisions in their domestic tax regimes and commit to implement the following:

  • 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)


By joining BEPS Inclusive Framework on BEPS, Oman has committed to implement the four minimum standards of the BEPS Package relating to Actions 5,6,13 and 14 (as mentioned above). Furthermore, members of the Inclusive Framework agree to work together on an equal footing to develop further BEPS measures, commit to participate in peer reviews on BEPS measures' consistent implementation, and pay an annual fee to the OECD. The implementation of tax treaty related measures to prevent BEPS is covered by the multilateral instrument (Action 15) which has not been signed by Oman yet.
Some of the anticipated key impacts on Oman entities are as follows:

  • Increased focus of Omani Tax Authorities on “substance” before providing any treaty benefit to the Tax payer or foreign Company
  • Currently, Oman tax law contains provisions in relation to Transfer Pricing but the same does not emphasize on any documentation. The provisions mention the fact that the transactions should be at Arm’s Length price. However, the Omani tax authorities expect the Taxpayer to provide detailed TP documentation during the assessment proceedings. With the increased focus on TP as part of the BEPS measures, and CBCR as one of the minimum standards, it is likely that explicit documentation requirements may be introduced in Oman
  • Oman will have to work closely with other member countries to monitor implementation of BEPS. This will facilitate the taxpayers to have access to effective and expedient dispute resolution mechanisms under bilateral tax treaties
  • More detailed disclosures to ensure transparency 
  • Additional compliance requirements

In the due course of time, Oman may issue legislative amendments highlighting the time lines in relation to compliances, the extent of legislative changes and the practical need to, prioritize the BEPS measures.
Further, it could be possible that the Oman tax authorities may seek to "enforce" the BEPS provisions even before formal implementation of legislation by the Sultanate of Oman. Thus, it is highly recommended that entities in Oman should start analyzing the impact of BEPS on their business without waiting for the formal legislation.
 

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