Thursday, March 28, 2024 | Ramadan 17, 1445 H
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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Investment and insurance companies also covered by CRS criteria for tax residency reporting

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Certain types of investment and insurance firms operating in the Sultanate also qualify as Reporting Financial Institutions that come under the ambit of the Common Reporting Standard (CRS) introduced by the Organization for Economic Co-operation and Development (OECD), and which Oman has committed to adopting as well.


CRS, currently in force in over 105 countries and jurisdictions around the world, aims to combat tax evasion by individuals and organisations/entities that seek to hide assets and income in foreign financial accounts. As a ‘participating jurisdiction’, the Sultanate is required to ensure that local banking and financial institutions identify financial accounts held by foreign tax residents. Oman’s apex tax authority, the Secretariat General of Taxation (SGT), is obligated to share this information with other participating jurisdictions that are party to this multilateral agreement built around the CRS norm.


In line with the Sultanate’s commitment under the CRS regime, Reporting Financial Institutions that fall under the remit of the reporting standard must obtain the tax residency status of every new customer — individual or entity — when they open new accounts with them effective from July 1, 2019.


According to PwC, the well-known multinational professional services network, Oman-based financial entities that qualify as Reporting Financial Institutions per CRS reporting norms broadly fall into four categories. They include Custodial institutions (any entity that holds, as a substantial portion of its business, financial assets for the account of others) and Depository institutions (any entity that deposits in the ordinary course of a banking or similar business).


Also designated as Reporting Financial Institutions, PwC points out, are investment entities, typically defined as any entity that (primarily) conducts as a business one or more of the following activities or operations on behalf of a customer: (i) Trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.); (ii) Individual and collective portfolio management; (iii) Otherwise investing, administering, or managing funds, money, or financial assets on behalf of other persons. They could also include entities in which the gross income is primarily attributable to investing, reinvesting, or trading in financial assets.


Additionally, Reporting Financial Institutions are also insurance companies (or the holding company of an insurance company) that issue, or are obligated to make payments with respect to, a cash value insurance contract or an annuity contract, PwC explained in a recently published newsletter on the CRS theme.


“In order to comply with the CRS regulations, Financial Institutions established in Oman will have to: Collect self-certifications from new accounts; Conduct the due diligence reviews on pre-existing accounts; Document their internal governance and compliance framework; and Report reportable accounts,” said PwC in its explainer on the Common Reporting Standard.


The Central Bank of Oman (CBO), it further noted, has mandated the collection of CRS related information for new account holders from July 1, 2019 for all Financial Institutions operating in the Sultanate. “Thus, these Financial Institutions are required to collect a CRS self-certification from new customers upon account opening. It is also expected that the existing account holders will be required to provide the necessary information on tax residency later on this year,” the audit, tax and consultancy services provider added.


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