Oman Guide: What are Input Tax and its treatment for VAT in Oman?
Input Tax Deduction is available to a Taxable Person who incurs it, if applied in making Taxable Supplies, or Supplies made to outside Oman in any of the GCC Implementing States and which would have been taxable if made in Oman.
What are the documents required for claiming Input Tax in Oman?
To claim any Input Tax Deduction in Oman, a person shall keep the following documents:
- Original Tax Invoices.
- Documents certifying the Import and the payment of any Import VAT.
- Tax Returns and records of Output Tax for Tax declared under the Reverse Charge Mechanism or delay of Import Tax.
What are the Goods and Services not eligible for Input Tax in Oman?
Input tax incurred on the following Goods and Services shall not be eligible for a claim unless supplied later:
- Goods or Services utilized for entertainment services.
- Motor vehicles and related Goods and Services for private use. It means any vehicle designed or modified for taking not more than ten passengers with the driver. Motor Vehicles shall not include vehicles used in a vehicle rental enterprise to consumers or vehicles registered as an emergency vehicle.
- Provision of food and beverage catering services.
What is the Apportionment of Input Tax for VAT in Oman?
A Taxable Person who incurs Input Tax on Goods or Services that are used fully or partially for non-taxable purposes is obligated to apportion the input tax on a fair and impartial basis based on the actual use of the Goods or Services.
Where a Taxable Person incurs Input Tax on Goods or Services used in making both Taxable and Exempt Supplies, the Taxable Person is entitled to:
- Full deduction of the Input Tax incurred on Goods and Services immediately and solely utilized for Taxable Supplies.
- No deduction of the Input Tax incurred on Goods and Services immediately and only used for Exempt Supplies.
- Deduction of Input Tax incurred on Goods and Services applied both in making Taxable and Exempt Supplies, computed using Partial Exemption.
What is the Partial Exemption for VAT in Oman?
Partial Exemption means the amount of Input Tax that a Taxable Person may deduct from the total Tax incurred in every Tax Period on Goods and Services applied for Taxable and Exempt Supplies within that period. The Partial Exemption is calculated at the end of every Tax period on supplies made during that period as follows:
(Total value of Taxable Supplies)/(Total value of Taxable and Exempt Supplies) X 100%
The deducted input tax amount shall be deemed as a preliminary deduction and applies to the annual deduction.
What is the Annual Partial Exemption for VAT in Oman?
The Taxable Person must, at the end of every Tax Year, calculate the Annual Partial Exemption. It determines the deductible input tax amount that he is entitled to deduct for the taxable year when he incurs input tax on goods and services used for taxable and exempted supplies in that tax year. The Annual Partial Exemption is calculated based on the following, (rounded to three decimal places):
(Total value of Taxable Supplies in the Tax Year)/(Total value of Taxable and Exempt Supplies in the Tax Year) X 100%
Determining the deductible input tax in a tax year is as follows:
- The amount calculated utilizing the Annual Partial Exemption Recovery Percentage exceeds the total values computed for Partial Exemption. The difference is deducted in the tax return for the Tax Period that follows the end of the Tax Year.
- The amount calculated is less than the total values calculated for Partial Exemption. The difference must be returned to the Authority through the tax return for the first Tax Period that follows the end of the Tax Year.
What is the Alternative Method for Partial Exemption in Oman?
The Taxable Person may use an Alternative Method to calculate Partial Exemption rather than the Method specified for calculating Partial Exemption provided meeting the following conditions:
- The Alternative Method gives an acceptable apportionment.
- Actual use of the Goods and Services.
- Annual adjustment of the exemption.
How to apply for an Alternative Method for Partial Exemption in Oman?
A Taxable Person who wants to obtain the Authority’s approval to use an Alternative Method to calculate Partial Exemption must apply in writing with the following details and documents:
- Basics of the Taxable Person and his Tax Identification Number.
- Name and address of the Responsible Person.
- Reasons for not using the method set out by the Authority.
- A complete description of the Alternative Method to determine Partial Exemption.
- The date from which the Alternative Method to determine Partial Exemption will take effect, not being a date before the date of application.
- Working examples for the Alternative Method to measure Partial Exemption based on figures for previous Tax Years, compared to the Method to calculate Partial Exemption set out in the Regulations.
What is the role of the Authority for an Alternative Method in Oman?
The Authority shall decide on the application to use an Alternative Method to Calculate Partial Exemption within thirty days from the date the applicant gives all information and documents. Otherwise, the application for a Partial Exemption Alternative Method is deemed to be rejected.
The applicant may object to the rejection decision of the Authority on the application for applying the Alternative Method to Calculate Partial Exemption within sixty days of the notification date of the decision, and no response given within thirty days of submitting the objection deems the objection to be rejected.
The Taxable Person in Oman may not apply any alternative Method of calculating the Partial Deduction unless he obtains the Authority’s approval and is notified of the approval decision.
The Authority has the right to take the needed measures to withdraw the decision to use the alternative method for calculating the partial deduction if it becomes evident that the input tax is not properly proportioned, provided the Taxable Person is notified. The Taxable Person, in this case, must use the method of calculating the Partial Deduction stipulated by these Regulations.
What is the Input Tax Deduction for Credit Notes in Oman?
The Taxable Person, upon receiving a credit note related to a tax invoice that has previously granted him the right to deduct the VAT fully or partially. It must amend the input tax with the amount of the Tax included in the notice for the tax period. The apportionment must be applied to the credit note in Oman.
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