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EY
Landmark Building, Opposite Al Amine Mosque 5th floor - Bawshar Muscat PO Box 1750 Muscat 112 Oman
Indirect tax contacts
Ahmed Amor Al-Esry +968 24 504 502 ahmed.amor@om.ey.com
Alkesh Joshi +968 22 504 558 alkesh.joshi@om.ey.com
Aamer Bhatti +971 50 8050 757 aamer.bhatti@ae.ey.com
Mitul Patel +968 22 504 569 mitul.patel@om.ey.com
Nikhil Grover +968 22 504 559 nikhil.grover@om.ey.com
On 12 October 2020, His Majesty Sultan Haitham Bin Tariq issued Royal Decree No. 121/2020 to introduce value-added tax (VAT) in Sultanate of Oman (Oman) at the rate of 5%. The law has come into force on 16 April 2021.
A. At a glance
Name of the tax
Local name
Value-added tax (VAT)
Date introduced 16 April 2021
Trading bloc membership Gulf Cooperation Council (GCC)
Greater Arab Free Trade Area (GAFTA)
Administered by Oman Tax Authority (OTA) (https://tms.taxoman.gov.om/portal/web/taxportal/)
VAT rates
Standard 5% Other Zero-rated (0%) and exempt
VAT number format
Alpha-numeric (10 characters), with two letters “OM” at the front indicating the country code (e.g., OMXXXXXXXXXXX)
VAT return period Quarterly
Thresholds Registration
Mandatory Greater than OMR38,500
Voluntary Greater than OMR19,250
Deregistration
Mandatory Less than OMR19,250
Voluntary Less than OMR38,500
Recovery of VAT by non-established businesses Yes (subject to conditions), but this is not yet defined
B. Scope of the tax
VAT applies to the following transactions:
• The supply (including deemed supply) of goods or services made by a taxable person in Oman
• The receipt of goods and services by a taxable person in Oman from a supplier who does not have a place of residence in Oman and is not subject to tax in Oman
• The importation of goods from outside the GCC implementing states into Oman (however, at the time of preparing this chapter, none of the GCC Member States treat one another as an implementing state for VAT purposes)
C. Who is liable
A “taxable person” in Oman is a person who conducts an activity independently for the purpose of generating income and is registered with the tax authority or is required to register.
A person’s obligation to register for VAT in Oman is determined based on their residence status. A person who has a place of residence in Oman must register with the tax authority in either of the following two cases:
• If the total value of supplies at the end of any month in addition to the 11 months immediately preceding it, exceeds the mandatory registration threshold (OMR38,500).
• If the total value of supplies, which is expected to be achieved at the end of any month in addi tion to the 11 months immediately following it, exceeds the mandatory registration threshold (OMR38,500).
Any person who does not have a place of residence in Oman must register with the tax authority from the date it is obliged to pay tax in accordance with the provisions of the Oman VAT law.
Please note that the introduction of the mandatory VAT registration threshold has been phased in over the course of the first year of the introduction of VAT as follows:
• The annual value of taxable supplies for the taxable person is more than OMR1 million, the registration window was 1 February to 15 March 2021, with effective registration date of 16 April 2021.
• The annual value of taxable supplies for the taxable person is between OMR500,000 and OMR999,999, the registration window was 1 April to 31 May 2021, with effective registration date of 1 July 2021.
• The annual value of taxable supplies for the taxable person between OMR250,000 and OMR499,999, the registration window was 1 July to 31 August 2021, with effective registration date of 1 October 2021.
• The annual value of taxable supplies for the taxable person between OMR38,500 and 249,999, the registration window is 1 December 2021 to 28 February 2022, with effective registration date of 1 April 2022.
Exemption from registration. A taxable person whose value of taxable supplies exceeds OMR38,500 but whose supplies are exclusively zero-rated may apply to the tax authority for an exemption from VAT registration (also known as registration exception). However, the tax authority has the right to collect any VAT due, as well as administrative penalties, for the period of exemption from registration if the taxable person was not entitled to the exemption.
Voluntary registration and small businesses. Every taxable person who has a place of residence in Oman and makes taxable supplies and is not obliged to register under the mandatory registra tion criteria may apply for a voluntary registration in either of the following two cases:
• If the total value of supplies or expenses at the end of any month in addition to the 11 months immediately preceding it, exceeds the voluntary registration threshold (OMR19,250).
• If the total value of supplies or expenses expected by the end of any month in addition to the 11 months immediately following it, exceeds the voluntary registration threshold (OMR19,250).
For companies with an Omani commercial registration certificate the VAT registration should be carried out online through the taxpayer portal. For individuals or entities without a commercial registration an online Excel form is available on the Oman tax authority website, which may be submitted via email.
Group registration. Two or more persons may register and may be treated subsequently as a tax group, provided the following conditions are met:
• Each person has a place of residence in the Sultanate
• All members are legal persons
• Each member must be a taxable person and registered for VAT (as per the requirements of the Oman VAT Law)
• One person, whether a member of the group or not, has control over all other members of the tax group
• None of the persons is a member of another tax group
• None of the persons is a person registered with the authority operating a special zone
“Control” for VAT purposes is defined as direct or indirect control of other person’s activities or commercial matters, or owns more than 50% of the voting rights, or more than 50% of the capi tal of the other legal person
The persons in the tax group must appoint one of them as the representative of the group. A registration application for the tax group must be submitted by the tax representative on the form prepared for such purposes, provided it includes the general details and documents for registra tion in respect of the members of the group, in addition to the following details and documents:
• A copy of the agreement concluded between the group members to appoint a tax representative and evidence of the representative’s approval of the appointment
• The tax identification number for each member of the group
There is no minimum time period required for the duration of a VAT group.
All members of the VAT group in Oman are jointly and severally liable for VAT debts and penal ties.
Non-established businesses. If a taxable person that does not have a place of residence in Oman and no other taxable person is obliged to pay the VAT due on the supplies in Oman (i.e., via the reverse-charge mechanism), the non-established business must register for VAT. There is a nil registration threshold for non-established businesses.
Non-established businesses must apply for VAT registration through downloading the Excel- based application form from the Oman tax authority website and making a submission via email.
Tax representatives. A nonresident person has the option to appoint a tax representative after obtain ing the approval of the tax authority. The tax representative must represent the taxable person in its obligations and rights related to the tax.
A taxable person who has no place of residence in Oman may appoint a tax representative pro vided the following conditions are met:
• The tax representative is appointed under a written and valid agreement
• The tax representative has a place of residence in the Sultanate
• The tax representative is registered for tax in the Sultanate
• Other conditions determined by the authority
Reverse charge. For certain transactions, the liability to account for VAT in Oman shifts from the supplier to the customer, under the reverse-charge mechanism. The reverse-charge mechanism must be applied when a taxable person in Oman receives a supply of services from a nonresident person and those goods or services are subject to VAT in Oman.
Domestic reverse charge. There are no domestic reverse charges in Oman.
Digital economy. Supplies of telecommunications (wired and wireless) and electronic services are subject to Oman VAT to the extent that the use and benefit of such services takes place in Oman.
Telecommunication services are defined in the VAT legislation, include those supplied through transfer, broadcasting, transmission or reception of signals, symbols, signs, scripts, visible and invisible pictures, sounds, data or information of any nature by wired systems, radio, light or any other electromagnetic or electronic systems, etc.
The place of supply of wired and wireless telecommunication services is the place of the actual usage or enjoyment of these services. The place of the actual usage or enjoyment shall be determined as follows:
• In the place of residence of the customer, in cases where the customer is taxable
• In the place of actual usage and enjoyment of those services, in cases where the customer is not taxable
Nonresident providers of electronically supplied services for business-to-consumer (B2C) supplies are required to register and account for VAT in Oman, regardless of the value of their supplies.
Nonresident providers of electronically supplied services for business-to-business (B2B) sup plies are not required to register and account for VAT in Oman. Instead, the customer is required to self-account for the VAT by way of the reverse-charge mechanism (see the Reverse-charge subsection above).
There are no other specific e-commerce rules for imported goods in Oman.
Online marketplaces and platforms. The supply of online marketplace or platforms for the sale of goods or services is an electronic service for VAT purposes in Oman and follows the same place of supply rules as indicated above (place of supply rules depend on whether the customer is a taxable or nontaxable person). Generally, businesses who supply online marketplace services to taxable persons in Oman (B2B) would not have a registration obligation as the VAT should be accounted for by the taxable customer under the reverse-charge mechanism. A registration obli gation is triggered if the supply has a place of supply in Oman, the customers are nontaxable (B2C) and the registration obligation arises regardless of the value of supplies.
Depending on the extent of operations in Oman a fixed establishment may be created.
Registration procedures. An application for VAT registration must be submitted to the tax authority in the prescribed form available on the taxpayer portal. A resident taxable person who has a commercial registration number can submit the application electronically whereas other taxable persons, including non-established businesses, are required to use the manual application form available on the tax authority website.
Registration applications must be submitted to the tax authority on the form prescribed for such purposes and should include the following details and documents:
• General information of the applicant
• The nature of activity or activities carried out
• Commercial registration number (if any)
• Income tax identification number (if any)
• Excise tax identification number (if any)
• Customs identification number (if any)
• Details of actual or expected annual supplies
• Details of the actual or expected annual expenses
• Customs documents proving the activity or part activity of the applicant falling within the customs regime
• Suspension statuses in accordance with the common customs law (if any)
• Documents proving that the activity or part of the activity of the applicant is carried out within the special zones
• Bank account details
• Any other details or documents determined by the authority
• Bank guarantee for nonresidents
Deregistration. In the case of deregistration, the registered person should apply to the tax author ity to cancel its registration in any of the following cases:
• Discontinuation of activity (i.e., commercial, industrial, professional, artisanal or service activi ties that may or may not be taxable under the Oman VAT law)
• Discontinuation of taxable supplies (supplies taxable at the standard or zero-rate of VAT under the Oman VAT law)
• If the value of the supplies falls below the voluntary registration threshold
A registered person may also request the cancellation of its registration if the value of its supplies falls below the mandatory registration threshold but exceeds the voluntary registration threshold.
The tax authority may reject an application for cancelation of registration if it does not meet the conditions for deregistration, and it must notify the taxable person of the decision to reject the application and the reason for such a decision.
Changes to VAT registration details. Any changes to the registration details for a registered taxable person already submitted to the tax authority at the time of obtaining VAT registration (e.g., change of principal officer or business address) should be reported within 30 days from the change in circumstance. The authority will issue a registration certificate containing the new information. The taxable person may notify the tax authority of the changes in the form available for this pur pose, on the tax authority portal.
Failure to notify the tax authority of the changes could subject the business to penalties including imprisonment of a period from two months to one year, or a fine of OMR1,000 to OMR10,000, or both of those penalties.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
The VAT rates are:
• Standard rate: 5%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods and services unless a specific measure provides for the zero rate or an exemption.
Examples of goods and services taxable at 0%
• Basic food items
• Medicines and medical equipment approved by Ministry of Health (MOH)
• Investment grade gold, silver and platinum
• International transport of goods or passengers and the supply of related goods and services
• Supply of means of transport by sea, air and land, adapted for the transport of goods and passengers for commercial purposes and the supply of related goods and services
• Supply of rescue aircraft and ships
• Supply of oil and gas and oil derivatives
• Export of goods and services outside the GCC region including those that would be exempt if supplied domestically
The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Certain Financial services
• Health care services and related goods and services
• Education services and related goods and services
• Supply of undeveloped land (bare land)
• Resale of residential real estate
• Local passenger transport
• Rental of real estate for residential purposes
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Oman.
E. Time of supply
The time when VAT becomes due is known as the “tax point” or “time of supply.” The general time of supply for the supply of goods and services is the earliest of any of the following dates:
• Date of the supply
• Date of issuance of tax invoice
• Date of partial/full receipt of consideration
Further clarification as to what constitutes “date of supply,” is the earliest of any of the following dates:
• Date of placing the goods at the disposal of the customer, in respect of the supply of goods without transport or dispatch
• Date of starting the transport or dispatch of goods in respect of the supply of goods with trans port or dispatch
• Date of completion of the installation or assembly of the goods in respect of the supply of goods supplied with installation or assembly
• Date of actual completion of the performance of services or receipt by the customer and accepting it explicitly or upon issuance of a completion of services certificate by the customer
• Date of disposal of goods, for purposes other than business activity, whether with or without consideration
• Date of changing the use of goods to use for nontaxable supplies.
• Date of retaining of goods after ceasing to carry on the activity
• Date of supplying goods without consideration, unless the supply is related to the activity, such as gifts or free samples
• Date of deregistration of the taxable person, in respect of supplies made because of deregistra tion
Deposits and prepayments. The receipt of a deposit or prepayment creates a tax point where this forms part of the total payment of a particular supply if it precedes the issuance of a tax invoice.
Continuous supplies of services. For supplies that include the consecutive issuance of invoices or payments, the tax is due on the date of payment specified in the invoice or on the date of pay ment, whichever is earlier, and it is due at least once every 12 consecutive months.
Goods sent on approval for sale or return. For the supply of goods sent on approval for sale or return, the time of supply is the earliest of the date the customer expressly accepts the goods, or on a date not exceeding one month from the date the goods were transferred to them or put at their disposal
Reverse-charge services. For the supply of reverse-charge services, the time of supply rule is that the taxable person who has received the services must declare and pay the due tax in the VAT return that relates to the tax period at the date of supply for which the purchase took place.
Leased assets. For operating lease contracts, the tax is due on the date of payment specified in the invoice or date of payment, whichever is earlier, and at least once every 12 consecutive months.
Imported goods. For imported goods, the tax is due on any of the following dates, depending on the circumstances:
• Date of import of goods
• Date the goods entered the first port of entry in accordance with the provisions of the common customs law
• Where the goods are placed under customs duty suspension in accordance with the common customs law, the date the imported goods are released from such a suspension
Please note that an import VAT deferment scheme is available, subject to application and approv al by the tax authority.
Other supplies. Vending machines. For supplies made from vending machines, the time of supply is the date of collecting the cash from the machine.
Vouchers. Single-purpose vouchers, which have determined place of supply and value of tax due, have a time of supply upon issuance. Multipurpose vouchers, which have no place of supply or value of tax determined at issuance, have a time of supply at redemption.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax incurred on the purchase of goods and services supplied to it for business purposes and where the VAT is specifically not disallowed for recovery under the law. Recovery is by way of deducting input tax against output tax, which is the VAT charged on supplies made by the business. Input tax includes VAT accounted for on imports of goods and self-assessed through the reverse-charge mechanism.
The time limit for a taxable person to reclaim input tax in Oman is three years. Input tax should be deducted in the same tax period in which the right to deduction arose. However, the taxable person may postpone the deduction to another tax period by notifying the tax authority. The right to deduct input tax expires after three years from the end of the tax period during which the right to deduct was established.
Nondeductible input tax. Input tax may not be recovered in respect of certain expenses specifi cally listed as nondeductible. Input tax may not be recovered in the below cases:
• If it is paid on goods and services used for purposes other than the taxable person’s economic activity
• If it is paid on goods prohibited from trade in Oman
• If the VAT is paid on supplies or imports for the purposes of making exempt supplies in Oman
Examples of items for which input tax is nondeductible
• Any goods or services used for the purpose of entertainment services
• Any motor vehicles and related goods and services that are available for personal use. Motor vehicles mean any vehicle that is designed or adapted for carrying not more than 10 passengers, including the driver. Motor vehicles do not include vehicles used in a vehicle rental business to customers or vehicles registered as an emergency vehicle
• Any provision of food and beverage catering services
Examples of items for which input tax is deductible (if related to taxable business use)
• Motor vehicles
• Mobile phones
• Business samples/gifts (subject to conditions)
• Business travel expenses (including accommodation)
Partial exemption. Input tax related to goods and services used to provide supplies that are subject to VAT and other supplies that are exempt, may be deducted in accordance with the proportion of costs related to the supplies subject to the VAT.
The standard partial exemption method consists of the following two-stage calculation:
• Attribution of input tax exclusively used in making either taxable or exempt supplies.
• Apportionment of non-attributable input tax using the standard input-based calculation, which will calculate the percentage of recoverable input tax. This percentage is based on the respective values of VAT incurred wholly to make taxable supplies and VAT incurred to make wholly exempt and outside-the-scope supplies. The percentage should be rounded to three decimal places
The percentage calculated must be multiplied by the amount of total non-attributable input tax incurred to establish the recoverable portion of that input tax.
The calculations referred to above must be undertaken in respect of each tax period where input tax incurred relates to making exempt supplies or to activities that are not in the course of busi ness. At the end of each tax year, the taxable person must undertake the calculation outlined above, but in respect of the entire tax year just ended and include the result in the first tax period of its subsequent tax year. The amount calculated for the tax year is compared to the input tax amount recovered in all the tax periods making up the tax year, and an adjustment to the recoverable tax must be made in the tax period.
Approval from the tax authorities is not required to use the partial exemption standard method.
A taxable person may use an alternative (i.e., special) method to calculate partial exemption. Such alternative methods may be used provided the following conditions are met:
• The alternative method to calculate partial exemption gives an acceptable apportionment
• The method is based on actual use of the goods and services
• The method must include an annual adjustment of the exemption Taxable person must obtain the tax authority’s approval to use an alternative method to calculate partial exemption.
Capital goods. Capital assets include material (tangible) assets (e.g., machinery, land and build ings) and immaterial (intangible) assets (e.g., patents, trademarks and royalties), which form part of the business assets of a taxable person, allocated for long-term use as a business instrument or means of investment. The following are also considered to be capital assets for the purposes of VAT:
• The acquisition or purchase of land, buildings or both land and buildings
• The construction of any building
• Large assets held primarily for sale in the ordinary course of business
Input tax incurred on the purchases of a capital asset should be adjusted over a period of:
• 10 years for long-term assets (e.g., assets permanently attached to land)
• 5 years for other capital assets
The adjustment period commences from the beginning of the year during which the capital assets were purchased, obtained or constructed. Input tax incurred on the purchase of the capital asset
should be adjusted in the relevant tax period based on the expected taxable use of the asset on a “fair and reasonable basis” based on the actual use of the asset. The input tax must be adjusted at the end of each tax year that falls within the adjustment period according to the following calculation:
• Adjusted tax = total input tax on capital assets x (initial recovery percentage – annual recovery percentage)
Any adjustment (positive or negative) should be done in the first tax period following the end of that tax year. If the capital asset is not used to make any taxable supplies in any tax year, the initial deduction percentage and the annual deduction percentage shall be zero percent (0%).
Where a taxable person sells, disposes of or surrenders a capital asset or ceases to be eligible to be registered for tax during the adjustment period, a final adjustment must be carried out, as fol lows:
• (Input tax incurred at the time of capital asset purchase) x (the number of years remaining for adjustment period) x (final adjustment percentage – initial recovery percentage) / number of years of adjustment period
Refunds. A taxable person can apply to the tax authority to refund the excess deductible tax for any tax period through the taxpayer checklist found on the online tax portal, during the pre scribed deadline for submitting the tax return for that period, provided the deductible excess tax in that period exceeds OMR100.
Otherwise, a refund application may be submitted for the tax year, regardless of the value of the deductible excess tax, and during the deadline prescribed for submitting the tax return for the first tax period following that tax year. In all cases, the application must be submitted within a period of five years from the end of the tax period in which the right arose, otherwise the right will be forfeited.
Pre-registration costs. A taxable person may deduct the input tax incurred on goods supplied to the taxable person or imported by the taxable person prior to the effective date of registration, as per the following conditions:
• The goods are supplied to, or imported by, the taxable person within a period not exceeding three years, counting back from the effective date of registration, and the goods are still avail able for use on the effective date of registration.
• The taxable person has the right to deduct input tax on these goods is in accordance the law and regulations.
Bad debts. A taxable person may adjust the value of the tax due if the consideration was not fully or partially collected, provided the following conditions are met:
• The unpaid consideration is a result of supplies within the taxable person’s activity
• The taxable person has listed this unpaid consideration on each supply recorded in its account ing books and records
• Where the value of the supply recorded in its books not including tax is over OMR5,000
• The taxable person has declared and paid the tax due on the supply to the authority
• The period between the tax payment due date mentioned on the invoice and date of the adjustment is no less than 12 months. If no tax payment due date is stated in the invoice, it will be taken as the tax invoice date
• The taxable person has written off the value of the consideration for the supply as a bad debt
• The supply is not made to related parties
• The taxable person has notified the customer in writing of the amount adjusted and included the wording “This is the amount of input tax to be adjusted on the tax return for the period within which the date of this notice falls.”
In all cases, the taxable person may adjust the value of the tax on supplies within three years from meeting conditions required for bad debts.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Oman.
G. Recovery of VAT by non-established businesses
Input tax is recoverable in Oman in the following special cases:
• On condition of reciprocity, tax paid by any foreign government, military, diplomatic and con sular bodies and missions, international organizations, heads and members of the diplomatic and consular corps accredited by Oman
• Tax paid by a person that does not have any place of residence in the Sultanate or any GCC state and is nontaxable
• The tax paid by any person who has a place of residence in any GCC State and is a taxable person in that State and does not have a place of residence in Oman and is not a taxable person in Oman
• The tax paid by tourists visiting Oman on goods purchased in Oman and carried by them in their personal luggage at the time of their departure outside the GCC States
At the time of preparing this chapter, for VAT purposes in Oman, GCC Member States will also be considered a non-GCC Member State until all GCC states implement a VAT system and there is an electronic services system (ESS) implemented between the States.
Refund of VAT paid by non-established businesses. Input tax paid in Oman by any person who does not have a place of residence in Oman or in any of the implementing GCC States can be refunded provided the following conditions are met:
• The individual is not registered for tax (or required to register) in Oman or in any of the implementing GCC Member States
• The individual does not have a place of residence in Oman or in any of the GCC Member States and does not supply goods or services for which it is required to pay tax in Oman or in any of the GCC Member States
• The applicant is tax registered in its country of residence if this country applies a VAT or a similar tax system
• The tax incurred in Oman by the individual is for the purposes of economic activity, and the tax is deductible in Oman
• The condition of reciprocity must be met in the tax rules in the applicant’s country of residence
• The total value of the tax claimed on any tax refund request should not be less than OMR100
• The tax should not be incurred on any of the following goods and services:
Petroleum products
Tobacco or e-cigarette products
Alcoholic drinks
Telecommunications services
Motor vehicles
Goods (fully or partially) consumed and used in Oman
A tax refund application can be submitted by a person who does not have a place of residence in the Sultanate or in any of the GCC implementing Member States using the form provided by the tax authority, provided that the request includes the following details and documents:
• A copy of purchase invoices including the number and date of the invoice and other supporting documents to the invoices
• In relation to each invoice: names, addresses and tax identification numbers of suppliers in the Sultanate
• Value of the tax on each invoice and in total
• The applicant’s bank account details
• A tax registration certificate or other statement issued by the tax administration of the country of residence of the applicant, showing the applicant’s business address and tax registration number, provided that the certificate or statement is issued within three months of the date of the tax refund application
Refund of VAT to tourists. Tourists to Oman may claim a refund of the VAT paid on purchases of goods upon departure from Oman provided all the following conditions are met:
• The purchased goods have not been consumed in Oman
• The total purchased goods on each invoice must not be less than OMR25, not including tax
• The purchased goods should be for personal use
• The purchased goods should be removed from Oman within three months from the date of the purchase
• The purchased goods must be transported among the personal luggage of the tourist
• The purchased goods must not include the following: Food and beverages Oil and gas or derivatives of oil and gas Tobacco and similar products
H. Invoicing
VAT invoices. A taxable person must issue a VAT invoice when it makes a supply of goods or services, including zero-rated, exempt and deemed supplies, or when it receives full or part of the consideration prior to the date of supply. A VAT invoice should be issued for supplies made to both resident and nonresident persons. Tax invoices can be issued in Arabic or in English, pro vided that an Arabic translation is provided upon the tax authority’s request.
Credit notes. Where, after the issuance of the VAT invoice, the VAT amount is to be adjusted (upward or downward) then a VAT debit or credit note should be issued. The VAT debit or credit note is treated as a VAT invoice. The issuance of credit notes is subject to the same require ments as a valid tax invoice. The credit note should make a clear reference (invoice number and date) to the original tax invoice to which it relates.
Electronic invoicing. Electronic invoicing is mandatory in Oman for all taxable persons.
Simplified VAT invoices. A simplified VAT invoice may be issued in either of the following situ ations:
• The nature of the supplies does not require the issuance of immediate tax invoices
• The value of supplies excluding tax is less than OMR500.
The taxable person must apply for approval from the tax authority to issue simplified VAT invoices following the guidelines published in the tax portal.
Self-billing. A VAT registered customer may issue a VAT invoice on behalf of the taxable supplier, subject to fulfilling the below conditions:
• VAT invoices should be issued in accordance with the specific requirements for a valid VAT invoice
• There is a written agreement between the parties that includes a description of the supplies to which this agreement applies
• The supplier does not issue a tax invoice for the same supply
• Both parties must notify the other party if they are no longer registered for VAT purposes
• The customer provides the supplier with a copy of the tax invoice issued on its behalf and that the supplier approves it
• The tax invoice includes the phrase “the taxable person is liable to pay any tax due on the sup ply”
• Each party notifies the other party in writing should they wish to cease this agreement
Use of this scheme requires pre-approval from the tax authority.
Proof of exports. Until the implementation of the electronic services system across all the GCC Member States, supplies of goods shipped from Oman to other GCC implementing states will be treated as an export of goods, which should be subject to the zero-rate of VAT, subject to the following conditions being met:
• The goods are physically exported to a place outside the GCC within (90) days from the date of supply
• The goods are not used, consumed or changed in any way before the actual export, except in the manner necessary to prepare the goods for export
A taxable person should maintain records and documents related to supplies of exported goods and services. Although the law has not explicitly stated the documents, this typically includes:
• Commercial documents (such as tax invoice, purchase orders, etc.)
• Transport documents
• Customs documentation
Foreign currency invoices. For the purposes of Oman VAT, VAT invoices can be issued in the domestic currency, which is the Omani rial (OMR) or any other currency. If the invoice is issued in a foreign currency, the VAT must be converted to OMR based on the average purchase and sale price of the currency published by the Central Bank of Oman at the date the tax is due.
Supplies to nontaxable persons. There are no special invoicing rules for supplies to nontaxable persons. As such, full VAT invoices are required. However, if the conditions to issue simplified invoices are met, simplified invoices can be issued for supplies to nontaxable persons (see the Simplified invoicing subsection above).
Records. Taxable persons must maintain the following records:
• Daily records in which the details of daily transactions are recorded according to their chrono logical and sequential order and maintaining all relevant documents that enable the control of the validity of these transactions
• The master record that monitors the opening of accounts and the transactions based on this account if there is a separate account for each type of supplies (taxable or exempt)
• The inventory record, where inventory items, the budget and the total count are recorded
• Records and documents related to supplies of imported and exported goods and services
• Records and documents related to intra-GCC supplies of goods and services, when applicable
• Records and documents related to all customs transactions
• All documents proving taxable supplies at zero percent (0%) rate
• Tax invoices, tax credit notes, tax debit notes issued or received
• Custom documents and other documents (e.g., shipping documents) related to import and export of goods
• Tax returns (including all supporting workings) and records of output tax in the case of tax declared under the reverse-charge mechanism or deferment of import tax
• Records that include information necessary to determine the correct tax treatment
The taxable person’s records or books should be maintained in OMR. However, foreign currency records can be maintained after receiving written approval from the tax authority.
The taxable person may keep accounting records and books, invoices and documents in any language, if they are made available in the Arabic language upon the request of the authority.
At the time of preparing this chapter, there is no guidance in the VAT law or from the tax author ities on whether the records need to be kept locally in Oman or can be kept outside the country.
Record retention period. Records should be maintained by the taxable person for 10 years (or 15 for real estate-related transactions) following the end of the tax year in which the tax return is filed.
Electronic archiving. Records can be archived electronically provided they are true copies of the original documents.
I. Returns and payment
Periodic returns. A taxable person must submit a VAT return electronically within 30 days fol lowing the end of the tax period.
The VAT return filing frequency is quarterly for all taxable persons.
• First tax period: January 1 to March 31
• Second tax period: April 1 to June 30
• Third tax period: July 1 to September 30
• Fourth tax period: October 1 to December 31
The first tax period starts from the effective date of registration until the end of the tax period. In all cases, the following tax period begins from the day following the end of the previous tax period.
Taxable persons are expected to file nil returns for tax periods with no taxable transactions.
Periodic payments. Payment of VAT due by a taxable person in respect of a tax period must be made at the latest by 30 days following the end of that tax period. The taxable person making the payment must provide details of the tax registration number of the taxable person and the tax period to which it relates. VAT due may be paid by any of the following means:
• Submitting bank checks in the name of the tax authority
• Depositing the amount in the account of the tax authority created for this purpose
• Issuing a written order to bank transfer the amount from the taxable person’s account to the tax authority’s account and notifying the tax authority. The VAT due is not be considered paid in this case unless the amount is credited in full to the tax authority’s account
• Any other means determined by the tax authority
Electronic filing. Electronic filing is mandatory in Oman for all taxable persons. All tax returns, financial statements, records, documents and others must be filed electronically to the tax author ity through the tax authority’s online portal. As an exception such returns may be submitted by hand or through registered mail.
Payments on account. Payments on account are not required in Oman.
Special schemes. Profit margin scheme for used goods. A taxable person may calculate VAT on any supply of used (secondhand) goods by reference to the profit margin scheme in the following situ ation:
• The activity of buying or selling used goods is within the scope of the taxable person’s usual activity
• The taxable person obtains approval from the authority to use the profit margin mechanism to calculate the tax on the form prepared for such purposes
• The used goods are physically located in Oman
• If the used goods are purchased from any of the following persons:
A nontaxable person in the Sultanate
A taxable person who calculated the tax on these used goods according to the profit margin mechanism under the approval of the authority
A taxable person who is not allowed to deduct input tax on the goods
The profit margin is the difference between the purchase price of the goods and the selling price of the goods, and the profit margin shall be deemed to be inclusive of VAT. A taxable person may not elect to calculate VAT on the profit margin in respect of the goods (as outlined above) if a
VAT invoice or other document is issued for the supply, mentioning an amount of VAT chargeable on the supply.
Where a taxable person has charged VAT in respect of a supply under the profit margin scheme, the taxable person must issue a VAT invoice that clearly states the phrase “tax calculated under the profit-margin mechanism” in addition to all other information required to be stated in a VAT invoice except the amount of VAT. A “self-issued profit margin invoice” should be issued when a taxable person purchases used goods from a nontaxable person.
Annual returns. Annual returns are not required in Oman.
Supplementary filings. No supplementary filings are required in Oman.
Correcting errors in previous returns. A taxable person in Oman can file a revised VAT return if it becomes aware of an error or omission in its VAT return. The revised VAT return should be filed electronically in the portal within 30 days of discovering the error or omission. A revised VAT return filed within the specified time limit is regarded as the original tax return.
It is not permissible to revise the VAT return after three years from the date of its submission.
In all cases, the taxable person is not allowed to revise the VAT return if the tax authority has initiated a tax inspection in relation to that return period.
Digital tax administration. There are no transactional reporting requirements in Oman.
J. Penalties
Penalties for late registration. Any taxable person who has not applied for VAT registration within the set time frame is liable to a penalty of imprisonment for a period not less than one year and not exceeding three years, and/or a fine of not less than OMR5,000 and not exceeding OMR20,000, or both. The court, in the case of recurrence, may double the penalty and increase the imprisonment to the maximum of the legal threshold of punishment but not exceeding half this threshold.
Penalties for late payment and filings. If a taxable person deliberately fails to submit a VAT return for any tax period, it is liable to a penalty of imprisonment for a period not less than two months and not exceeding one year, or a fine of not less than OMR1,000 and not exceeding OMR10,000, or both. The court, in the case of recurrence, may double the penalty and increase the imprison ment to the maximum of the legal threshold of punishment but not exceeding half this threshold.
For late payment of VAT, a surcharge is imposed at a rate of 1% on the value of tax not paid. The surcharge applies to every month of the payment being overdue or part of a month from the end of the specified period for settlement until the settlement date.
Penalties for errors. Deliberately including inaccurate data or information in a refund application, deliberately issuing an invoice stating tax other than the tax imposed in accordance with the provisions of the law is liable to a penalty of imprisonment for a period not less than two months and not exceeding one year, or a fine of not less than OMR1,000 and not exceeding OMR10,000, or both. The court, in the case of recurrence, may double the penalty and increase the imprison ment to the maximum of the legal threshold of punishment but not exceeding half this threshold.
Refraining from including the actual data of the taxable amount and tax due in the VAT return is liable to a penalty of imprisonment for a period not less than one year and not exceeding three years, or a fine of not less than OMR5,000 and not exceeding OMR20,000, or both. The court, in the case of recurrence, may double the penalty and increase the imprisonment to the maximum of the legal threshold of punishment but not exceeding half this threshold.
Penalties include imprisonment of two months to one year, or a fine of OMR1,000 to OMR10,000, or both of those penalties can be imposed for failing to notify the tax authority of any changes to a taxable person’s VAT registration details, within the set deadline (see the subsection Changes to VAT registration details above).
Penalties for fraud. Any taxable person who fails to report the correct data as to the taxable amount and tax due in the return or submits forged tax returns, documents or records to evade payment of tax, in part or full is liable to a penalty of imprisonment for a period not less than one year and not exceeding three years, and/or fine of not less than OMR5,000 and not exceeding OMR20,000, or both. The court, in the case of recurrence, may double the penalty and increase the imprisonment to the maximum of the legal threshold of punishment but not exceeding half this threshold.
Personal liability for company officers. The responsible person of the company can be held person ally liable for not complying with the provisions of Oman VAT law and executive regulations.
Statute of limitations. The statute of limitations in Oman is three years. The tax authority cannot generally adjust returns after three years from the date of submission. This period may be extended to five years in cases of proven fraud. Taxable persons are not allowed to amend a tax return after three years from the date of its submission.
K. Transitional provisions
Voluntary registration. Transitional mandatory registration for residents applies, resulting in a phased implementation process. The phases are as follows:
• Effective VAT registration date of 16 April 2021 – applies if annual value of taxable supplies for a taxable person is greater than OMR1 million
VAT registration window of 1 February to 15 March 2021
• Effective VAT registration date of 1 July 2021 – applies if annual value of taxable supplies for a taxable person are between OMR500,000 and OMR999,999
VAT registration window of 1 April to 31 May 2021
• Effective VAT registration date of 1 October 2021 – applies if annual value of taxable supplies for a taxable person are between OMR250,000 and OMR499,999
VAT registration window of 1 July to 31 August 2021
• Effective VAT registration date of 1 April 2022 – applies if annual value of taxable supplies for a taxable person are between OMR38,500 and OMR249,999
VAT registration window of 1 December 2021 to 28 February 2022
Nonresidents of Oman are required to register for VAT in Oman regardless of the business turn over if they are obliged to pay VAT in Oman.
Time of supply and charging VAT. If an invoice was issued or payment was made prior to the VAT implementation date (16 April 2021) in respect of a supply of a good or service that takes place after the VAT implementation date, the supply should be treated as made after the VAT imple mentation date and VAT should be charged in case the supply is subject to VAT.
The supply will be deemed as taking place after the VAT implementation date in the following cases:
• If the date of delivery of the goods is after the VAT implementation date
• If the date when the performance of services is completed occurs after the VAT implementation date
For continuous supplies, no VAT is due on the portion of the value of the supply performed prior to the VAT implementation date. However, VAT is due on the portion of the value of supply performed on or after the VAT implementation date (unless exemption or zero-rating applies).
Implementation of VAT in other GCC Member States. GCC countries that have already imple mented VAT are treated as non-implementing states if they do not treat Oman as an implementing state in their local tax legislation and they are not fully compliant with the provisions of the GCC VAT Agreement. The supply of goods and services from non-implementing states is considered as made from outside the GCC territory and the person’s residence in such countries is treated as non-GCC residence.
Electronic services system in all GCC Member States. Intra-GCC supplies involving the shipment of goods from Oman to another GCC Member State will be considered as an export of goods until the establishment of the electronic services system in all GCC Member States.
Contracts silent on VAT. Contracts silent on VAT, that have been entered into prior to the VAT implementation date in Bahrain but that straddle such date, should in general be treated as VAT inclusive.