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.

For hassle-free VAT Services in UAE? Click here to send an inquiry.

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

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

VAT exempt

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.

Standard rating

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.

Read also: VAT Registration For Free Zone Companies In UAE

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!