The implementation of the Value Added Tax (VAT) in Oman was initiated through Royal Decree 121/2020 in 2021. The legislation, unveiled on October 18, 2020, became effective on April 16, 2021. Aligning with UAE’s VAT rate of 5% and conforming to GCC unified agreements and global standards, Oman adopted a similar approach to VAT application. In 2024, the applicable registration thresholds for VAT in Oman are as follows:
- Mandatory registration is required if the total value of supplies in a year exceeds or is expected to exceed Oman Riyal (OMR) 38,500.
- Voluntary registration is permissible if the total values of supplies in a year surpass or are anticipated to surpass Oman Riyal 19,250.
- Administered by the Oman Tax Authority (OTA), the VAT registration process in Oman is entirely conducted online through the OTA portal.
Understanding these thresholds and the registration process is essential for businesses aiming to operate within Oman’s VAT regime.
Types of supplies applicable under the Oman VAT Law in 2024
Different types of supplies exist under the Oman VAT law. The applicable VAT rates are dependent on the nature of goods and services. These are listed as follows:
- Standard-rated supplies: the standard-rated goods and supplies are the ones on which a standard 5% rate will be applicable.
- Zero-rated supplies: The supplies categorized as zero-rated will attract a rate of 5% VAT per the Oman rules. The taxpayers, however, are eligible to claim relevant input tax. These supplies involve exporting goods and services outside the Oman borders, specific financial services, some basic food items and international transport services.
- Exempt supplies- The third category is the supplies on which VAT can neither be charged nor claimed for input tax. These supplies are certain financial services, transportation inside Oman or local transportation, educational services and renting of residential properties
- Out-of-scope supplies- these services have been kept out of VAT scope by the Oman tax authorities.
What input tax deductions are available under the Oman VAT law:
To claim for input VAT deductions, businesses must keep the following documents in records:
- Tax invoice original copy
- Import related documents
- Tax returns and output VAT records in case the reverse charge mechanism is applicable
- Tax return and records in case the input tax has been postponed
Mandatory records for Oman VAT law in the year 2024
The VAT-registered business in Oman, like other GCC countries, must maintain documents for VAT filing and auditing purposes. The mandatory documents list is as mentioned below:
- Daily transaction records
- All tax invoices in the prescribed format
- Inventory details
- Records of intra-GCC sales and purchase of goods and services
- The list of imported and traded goods and services
- Custom transaction details
- Any other records that the authority may require.
The records can be kept in electronic format and as soft copies but under specified conditions per the Oman Tax rules and regulations.
VAT return norms as per the Oman VAT law
The businesses registered for VAT in the Sultanate of Oman must submit a VAT return and pay VAT returns in quarterly electronic payments to the Oman Tax Authority. The applicable due date for VAT return is 30 days from the quarter’s end. VAT experts in the UAE shall be consulted for any clarifications and doubts related to Oman VAT rules.
Penalties applicable in Oman VAT law
The following penalties are applicable as per the Oman VAT laws:
| Fine applicable | Offence Nature |
| OMR 300-OMAR 500 | 1. Late VAT filing after the due date2.Not displaying the VAT certificate3.Failure to maintain records and accounts as per the specified VAT guidelines from the Oman Tax Authority |
| OMR 500- OMT 1000 | 1. Claiming a VAT return based on a false document2. Not reimbursing an incorrect VAT return received3. Not registering the company for VAT within the lines indicated4. Not mentioning the prices of goods and services at the business place |
| 1% to 25% of the difference between actual and declared tax due | For Incorrect declaration of tax returns |
| 300% of the tax evaded | Evasion of tax |
Our team of VAT registration experts in the UAE possesses deep knowledge of VAT laws across the GCC region. From securing your VAT registration certificate to handling tax filings, we’re dedicated to supporting your compliance journey. If ensuring VAT compliance is a challenge for your business, get in touch with us, and let us simplify the process for you.
References
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