Oman Guide: What is the Timeline of Introducing VAT in Oman?

VAT in Oman

The six Arab Gulf states that are a part of the Gulf Cooperation Council agreed to implement VAT in each of its six-member states in 2016. This comes, as a result, to help the GCC countries cope with the oil price collapse and recession that ensued, and hence there was no other go but to implement the consumption tax. The government of Oman signed the VAT Framework or Common VAT Agreement treaty in 2017 in order to co-operate with the other GCC member states for the implementation of VAT.

Dubai and the Kingdom of Saudi Arabia introduced the VAT in January 2018 while Bahrain introduced VAT in January 2019.

A special seminar titled “Value Added Tax (VAT): The Motives, Objectives and Potential Impacts on Economy and Development” was held by the Oman Chamber of Commerce and Industry on the 25th of September 2018. The government of Oman proposed to implement VAT in January 2019 indicating that it would make foodstuffs, public transport, healthcare, education sectors, and part of the housing sector, subject to a nil VAT rate as these are considered necessities but due to various factors, couldn’t do so. However, it was stated during the seminar that there are preparations to implement the VAT in September 2019.

Another important point to be considered for the implementation of Oman VAT Law is from the perspective of companies. According to various tax experts, it takes 10 to 15 months on average for a company to implement VAT fully. Further, companies will have to complete all the necessary compliance with the new VAT regime. This might introduce the risk of non-compliance to the company which to date was not present. VAT legislation has outlined penalties for non-compliance for every area where a company might have not fulfilled the necessary criteria. Therefore, a company will henceforth be liable to pay these fines where compliance is lacking if an implementation has been done in a hurry. Hence, preparation is essential to the company from both a financial and a risk perspective. Businesses have to start preparing early and be ready to ensure compliance from day one so that there is no non-compliance later on. Also, this saves them time and cost of penalties, if any. This means that there is going to be a huge demand for advisers, IT vendors, and developers to ensure VAT compliance for businesses.

The Ministry of Finance in Oman has to take into account the specific concerns of businesses and companies regarding the impact of VAT on specific industries. Various plans to launch awareness campaigns both for business owners and the public after implementation have been mentioned by the Ministry of Finance.

In Oman, the local VAT legislation, regulations and guidance is under preparation and review by the government at present. However, Oman will not introduce VAT until the year 2021 since the same has been excluded specifically from the Budget of 2020.

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