IslamicFinance.de

The Central Bank of #Oman and the Capital Market Authority allow Islamic financial institutions to follow the standards issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). AAIOFI’s financial accounting standards differ from International Financial Reporting Standards (IFRS). The differences between AAOIFI and IFRS standards have necessitated specific tax provisions for Islamic Finance Transactions (IFTs). To achieve this, a new chapter has been inserted in the income tax law of 2009. The chapter provides a framework to determine the tax liabilities of parties to an IFT. According to the new tax chapter, income includes any sum received in lieu of interest. The tax provisions also clarify that any partnerships designed solely to comply with Sharia will be disregarded. The latest tax law states that the financial statements can be prepared based on IFRS or any other similar standards approved by the Secretary General of Taxation (SGT). Institutions who have prepared their financial statements based on AAOIFI standards will have to reconcile their tax returns with the SGT.