Oman issued Royal Decree (No 121) of 2020 on the 18th of October 2020 regarding the implementation of VAT in Oman starting on the 16th of April 2021. Consistent with the Unified Agreement of the GCC, Oman’s standard VAT rate will be at five percent with provisions for exemptions and zero-rating in the VAT legislation. By global standards, the standard rate of five percent is considered very low. Online VAT registration in Oman has just been launched and it is recommended to visit the website of the tax authority to complete the process.
Transitional Phase for Oman VAT Registration
In the table below, you’ll find details of registration timelines, categories, and the applicable dates of registration as laid out in Royal Decree (No 121) of 2020 on VAT in Oman.
|Category||Timeline for Registration||Effective Registration Date|
|For a taxable person who has an annual supplies value of 1,000,000 OMR or is forecasted to exceed a million Omani Rials||Feb 1 2021 to Mar 15 2021||Apr 16 2021|
|For a taxable person with annual supplies value anywhere between 500,000 to a million OMR||Apr 1 2021 to May 31 2021||Jul 1 2021|
|For a taxable person whose value of annual supplies is between 250,000 to 499,999 Omani Rials||Jul 1 2021 to Aug 31 2021||
Oct 1 2021
|For a taxable person with annual supplies value of anywhere between 38,500 to 249,999 Omani Rials||Dec 1 2021 to Feb 28 2022||Apr 1 2022|
VAT Rates Under Oman VAT Law
Under the recently launched VAT legislation in Oman, the following are the three types of VAT rates:
Zero-rating is subject to terms and conditions that are mentioned in the Oman Executive Regulations. Supplies that are considered zero-rated in Oman under the new VAT legislation are as follows:
- Supply of specified medical equipment and medicines
- Supply of certain consumable or food products that are specified by the decision of the Chairman
- Supply of investment platinum, silver, and gold
- Supplies of intra GCC or international transport of passengers and goods
- Supply of services with connection to transport of passengers and goods intra GCC or international
- Supply of a rescue plane or marine vehicle
- Supply of natural gas, derivatives of oil, and oil
- Supplies that are made outside of GCC countries that are in specified cases (subject to certain terms and conditions)
- Supply of products and services which are VAT exempt in Oman and are supplied to territories outside the GCC
Read also: How To Reduce VAT Penalties In UAE
Exemption from VAT is subject to terms and conditions which are mentioned in Oman Executive Regulations. Supplies that are exempt from VAT in accordance to Oman VAT law are as follows:
- Healthcare services, including all related products and services
- Financial services
- Undeveloped land or bare land
- Educational services, including all related products and services
- Local passenger transport
- Resale of any residential property
- Rental property for residential purposes only
The VAT legislation in Oman also specifies certain goods imported abroad that are exempted from VAT, including personal luggage and returned goods.
All supplies of products and services within Omani jurisdiction, except the ones mentioned earlier, will be charged with a five percent standard VAT rate, subject to a place of supply as mentioned in Omani VAT law.
How Oman Businesses Should Prepare for VAT
The tax authority issued additional guidance on preparing for VAT implementation in Oman. The guide encourages all Omani businesses in acting early through the appointment of a steering committee, as well as a working group of specialists from across the internal business divisions. The key personnel is to meet regularly in order to track the progress of preparations. A business in Oman has to make itself fully aware of all VAT laws, including the guidance of the tax authority, then identify all areas of ambiguity as soon as possible for them to be cleared with the tax authority.
The tax authority also encourages businesses to properly planning their projects for VAT implementation. Some examples of crucial steps which are to be taken to make sure of a smooth and successful implementation of Oman VAT include:
- Developing a map for tasks that are required in being ready to implement VAT
- Assessing the impact of VAT rates on the pricing of goods and services
- Holding VAT awareness seminars for all external stakeholders and employees
- Determining and implementing the required changes to the company’s IT systems including template documentation, record-keeping procedures, and point of sale
- Seeking sufficient support for VAT implementation in Oman, most especially from ERP specialists, lawyers, and tax advisers
- Identifying the opportunities which a business can take advantage of the optional aspects of Oman VAT law e.g. bad debt relief and VAT grouping
If you want to speak to seasoned tax professionals, contact us here in VAT Registration UAE today!