Oman Guide: What is the profit margin scheme for VAT in Oman?

VAT in Oman
What is the profit margin scheme for VAT in Oman

The profit margin scheme for VAT in Oman allows the registered person, in any Tax Period, to calculate and charge Tax based on the profit margin earned on the Taxable Supplies.

What are considered used goods in the profit margin scheme for VAT in Oman?

To implement the Law, Used Goods shall include the following:

  • Tangible moveable property suitable for further use as it is or after repair provided it has not gone through adjustments or repairs that change its prime character.
  • Antiques more than fifty years old, artworks, or other items of scientific, historical, or archaeological importance.
  • Collectible Goods include stamps, coins, and banknotes.
  • Collector pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological, paleontological, ethnographic, or numismatic interest.

Precious stones and pearls of different ages but not strung, mounted, or set, and live animals and plants not considered used goods.

What are the conditions to calculate Tax as per the Profit Margin scheme for VAT in Oman?

  • The buying or selling of Used Goods is within the range of the Taxable Person’s general activity.
  • Securing permission from The Authority to practice the profit margin scheme to calculate the VAT on the plan devised for such purposes.
  • The Used Goods found in the Sultanate.
  • Purchasing the Used Goods from a Non-Taxable Person in the Sultanate, a Taxable Person who calculated the Tax on these Used Goods according to the Profit Margin Mechanism in Oman under the approval of the Authority, and a Taxable Person who is not allowed to deduct Input Tax on these Goods.

How is the VAT computed as per the Profit Margin scheme for VAT in Oman?

The Profit Margin in Oman determines the Tax Due on the sale of Used Goods in the usual course of the activity of the Taxable Person. Its difference in the value of the consideration for the sale of the Used Good and the cost of purchasing of the Used Goods. The Tax Due computed as follows:

Tax = (Profit Margin X Tax Rate) / (100% + Tax Rate)

What is a Profit Margin Self-Invoice for VAT in Oman?

Profit Margin Self-Invoice is issued when purchasing Used Goods from a Non-Taxable person selling the goods. A Taxable Person must keep records. In the event of not selling the Used Goods at the end of this period, and the Taxable Person intends to sell them by the Profit Margin Scheme, and then keep the records until the date of sale of the goods.

What are the details of the Profit Margin Self-Invoice for VAT in Oman?

Any Taxable Person supplying Used Goods must issue a tax invoice to the customer including all details but shall not include the amount of Tax and instead shall include the phrase Tax calculated under the Profit Margin Scheme. The Taxable Person shall issue an invoice indicating the value of Tax Due under the Profit Margin scheme at the time of issuing an invoice to tourists for Tourist Refunds in Oman.

The Taxable Person who applies the Profit Margin scheme is not entitled to any Input Tax deduction on the cost of purchase of the Used Goods.

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