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Oman Guide: Guide to VAT in Oman

VAT in Oman
Guide to VAT in Oman

Value-Added Tax in Oman has finally been introduced on 16 April 2021 and a guide on VAT registration and preparation has been given by Oman Tax Authority (OTA). It is evident from the VAT executive regulation that VAT registration in Oman will be implemented in a phased manner by considering the revenue of the taxable person. Oman is the fourth of six GCC states to implement VAT as part of a 2016 VAT union agreement.

VAT registration in Oman; Guidelines

  • For any individual who has a place of residence in the Sultanate and exceeds or is expected to exceed the annual revenues generated from a commercial, industrial, professional or other activity the voluntary registration limit is 19,250 OMR.
  • For any individual who has a residence in the Sultanate and exceeds or is expected to exceed his annual expenses in the Sultanate related to a commercial, industrial, professional or other activity, the voluntary registration limit is 19,250 OMR.

The above-mentioned VAT registration threshold is based on annual sales for the rolling preceding 12 months. For non-resident businesses making taxable supplies in Oman, VAT registration is a must.

How to Register for VAT in Oman

According to the VAT registration guide, the following are steps involved in the VAT registration process:

  • Determine whether a person fulfills the VAT registration limit.
  • Examine the components of annual supplies for the purpose of VAT registration in Oman.
  • Estimate the value of supplies for relevant periods.
  • Registration timelines to be determined based on annual supplies.
  • Submission of registration application as per regulations.

VAT Preparation in Oman

It is advisable for business entities in Oman to proactively plan in order to incorporate VAT by appointing a steering committee and a specialist group. Oman tax authority has also provided a plan that will help in VAT implementation, given below are the few ways company can adopt to ensure a successful VAT implementation project:

  • Identifying the financial and non-financial impacts of VAT on all business transactions.
  • Reviewing the impact of VAT on product pricing.
  • Developing a roadmap of all tasks required in order to be ready for VAT in Oman.
  • Arranging VAT awareness workshops/training sessions for internal and external stakeholders.
  • Finding ways to take advantage of VAT grouping and bad debt relief provisions.
  • Working in collaboration with tax advisers, ERP specialists, and lawyers.
  • Prepare sufficient tax reports in order to support periodic VAT returns in Oman.

Oman VAT Exemption

According to the regulations provided by Oman Tax Authority, 94 food items are exempted from VAT encompassing milk, meat, fish, poultry, fresh eggs, vegetables and fruits, coffee and tea, olive oil, sugar, nutritional products for children, bread, bottled drinking water, and salt.

The Sultanate of Oman has applied zero-rate to basic commodities and exempted some sectors including:

  • Financial services
  • Supply of preventive and healthcare services and related goods/services
  • Supply of educational services in Oman
  • Supply of peer land
  • Resale of residential buildings
  • Local transportation
  • Supply of residential buildings by renting
  • Import of goods
  • Goods and services for military services
  • Imports of personal items and gifts carried in travelers’ personal luggage
  • The supplies for non-profitable charitable societies and returned imported goods.

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