By: Ahmed Al Abri, Farah Al Qubtan (Bait Al Qanoon)
Introduction:
Understanding the authority and scope of tax assessment powers held by the Omani Tax Authority is of immense importance for both taxpayers and legal professionals. The Income Tax Law No. 28/2009, as amended by Royal Decree No. 9/2017, outlines specific circumstances under which the Tax Authority may exercise its powers to assess taxes. This article aims to delve into these provisions, shedding light on the criteria for assessment and the obligations of the Tax Authority in providing justifications for their assessments.
Article 143 of the Income Tax Law: Key Situations for Tax Authority Assessment.
Article 143 of the Income Tax Law grants the Tax Authority the power to assess taxes in four distinct situations:
1. When an income declaration is submitted without fulfilling legal requirements or lacking the necessary documentation.
2. In cases where the taxpayer fails to submit the income declaration within the stipulated timeframe.
3. When an inspection reveals that the income declaration does not reflect the true income of the taxpayer.
4. Upon the request of the taxpayer.
These provisions indicate that the Tax Authority's assessment powers are primarily invoked when there is a failure on the part of the taxpayer to comply with their tax reporting obligations or when the information provided is deemed incomplete or inaccurate.
Critical Issues and Challenges:
Despite the clarity in the circumstances under which the Tax Authority may assess taxes, two critical issues arise in practice:
1. Criteria for Assessment: The specific criteria that the Tax Authority must follow when assessing taxes are not explicitly outlined in the current Omani Income Tax Law.
2. Obligation to Provide Justifications: The law does not mandate the Tax Authority to provide written reasons and justifications for its assessments to the taxpayer.
Analysis and Recommendations:
The lack of explicit criteria and obligations to provide justifications may result in broad discretionary powers for the Tax Authority, potentially leading to arbitrary assessments. To address these concerns, legislative clarification and judicial principles are recommended to align with best practices, ensuring transparency and fairness in tax assessments.
Conclusion:
The powers of the Tax Authority in Oman to assess taxes are crucial for the integrity of the tax system. However, the lack of clear criteria and obligations to provide justifications poses significant challenges. Legislative and judicial interventions are necessary to enhance transparency, accountability, and fairness in tax assessments, thereby ensuring the realization of tax justice for all tax payers in Oman.