VAT Executive Regulations in Oman
On 14 March – Oman Tax Authority Chairman, Saud Nassir Al-Shukaili, issued decision No. 53/2021 promulgating VAT Executive Regulation which was based on the provisions of Royal Decree No. 121/2020 on VAT Law. It was made clear in the VAT Executive Regulation that VAT will be imposed on the goods and services effectively from April 2021. VAT Executive Regulation provides detail on VAT registration, repayment, tax collection, and penalties. The VAT Executive Regulation consists of comprehensive 13 parts which comprises of 211 articles.
According to VAT Executive Regulation, there are 93 such items, including medical drugs and equipment, that are charged zero tax. The Oman Sultanate is expecting to generate 1.5% of the value of Gross Domestic Product or RO 400 million per annum from the VAT. Since it is quite evident from the global implication of VAT that it facilitates in generating maximum revenue for the government. This tax return from the VAT will give Sultanate sufficient resources to build infrastructure for the citizen of Oman.
Pre-Registration Input VAT under VAT Executive Regulations
It has been stated in article 73 of Executive Regulation, that the taxable person can claim the input tax incurred for the supply of goods and services prior to the registration within the period of 3 years and 6 months respectively. However, to claim the input VAT, the taxable person must inform the Tax Authority within 30 days of registration.
VAT Executive Regulations regarding Tax Invoice Format
According to article 147 of the VAT Executive Regulation, the tax invoice must include the following content:
- The sentence/phrase: “Simplified Tax Invoice”
- Issuance date, supply date, payment date of the invoice
- Suppliers’ Full name, address, and tax identification number
- Description of goods and services
- Quantity of goods
- Total consideration excluding tax
- The applicable tax rates
- Any price Discount
- Taxable Value
- Value of the VAT Tax Due
VAT Tax period and VAT Returns Filing
VAT Executive Regulation states clearly that all the taxpayer calculate and assess VAT returns based on the calendar quarters: 1 January until 31 March, 1 April until 30 June, 1 July until 30 September, and 1 October until 31 December.
In addition to that VAT Executive Regulation mentions that the taxable person will be required to file a VAT return electronically through the online portal in the form prescribed by the Oman Tax Authority. This tax return along with the VAT payable will be due within a period of 30 days from the end of the tax period.
VAT Executive Regulations requires Records Maintenance
The VAT Executive Regulations has given the detail on the documents that need to be maintained by the taxable person, it includes the following:
- Day-to-day transactions details in a chronological and sequential manner.
- Record of Inventory, inventory items, the budget, and the total count.
- All documents related to supplies of imported and exported goods and services.
- Documents and files related to the intra Gulf Cooperation Council supplies of goods and services.
- Records and procedural documents related to the customs relations.
- All tax invoices and other documents are issued by the taxable person.
- All tax invoices and other documents are received by the taxable person.
- All those documents are needed to evaluate the accurate tax treatment.
VAT Executive Regulations Exemptions and Zero-Rating
It is essential for businesses to study with a focus regarding the tax implications and treatment. In VAT Executive regulations, businesses have been categorized as zero tax or exempted depending on the nature of goods and services they are operating in. This has been done so that the living standards and lifestyle of the public do not get affected due to VAT Law. Moreover, VAT Executive Regulations ensure that the basic facilities will be easily available and fundamental needs are fulfilled.
VAT zero-rating will be applied to:
- All supplies related to oil, oil derivatives, and gas
- Exports of goods and services
- Supply of certain food items
- International transport of goods and passengers
- Investment gold, silver, and platinum
- Supplies to customs duty suspension and special zones
- Certain medicines and medical equipment
VAT exemption will be applied to:
- Financial services (including insurance or Takaful)
- Education services
- Healthcare services
- Real estate transactions relating to residential properties
VAT Executive Regulations Administrative Penalties
The VAT Executive Regulations define the manner in which a taxable person is allowed to object to the tax assessment, tax return adjustment, or the registration decision made by the Oman Tax Authority.
Administrative fine/penalties of OMR 500 to OMR 5,000 are set out for certain offenses, including:
- Failure to submit tax returns within a specified period of time
- Failure to present a VAT registration certificate in a visible place as per the
- VAT Executive Regulations
- Failure to maintain records, accounting books, and documents in accordance with the VAT Executive Regulations
The fines could range from OMR 1,000 to OMR 10,000 in case of the following conditions:
- Refund of the tax value based on inaccurate documents or calculations
- Failure to submit a request to cancel the registration in the compulsory cases specified in the VAT Executive Regulation
- Not able to pay recovered VAT after becoming aware of the error
- Failure to provide process of goods and services including VAT