The Shura Council has approved the draft Oman VAT law and referred it to the State Council. According to news reports, the Shura Council has also approved the recommendations of the Economic & Financial Committee of the Shura Council, which relate to:
The members of the Shura Council are believed to hold mixed views on the percentage of the annual growth rate (currently suggested at 3% per annum), and the threshold for income groups intended to qualify for the relief/exemption (currently, it has been suggested that this will apply for those with a monthly income of less than RO900).
The measures seeking to afford relief/exemption to medium and low-income groups are in addition to the exemption/zero rating of certain sectors currently proposed in the draft Oman VAT law. According to a recent radio interview with His Excellency Dr. Sulayem bin Ali Al-Hikmani, Chairman of the Economic and Financial Committee of the Shura Council, these sectors include education, healthcare and utilities.
As a next step, the State Council is required to make a decision on the draft VAT law, by approval or amendment, within 15 days from the date of the referral. Once the State Council approves the draft VAT law, it will be submitted to His Majesty the Sultan, with the recommendations of both the Shura and the State Councils. The views of the Shura and State Councils are recommendatory in nature, not binding.
While the original intention was to allow businesses at least six months to prepare for VAT implementation, given the current economic conditions, the possibility of an early 2021 implementation cannot be ruled out.
We have a dedicated team of VAT implementation specialists in Oman. If you need any assistance, please reach out to your tax advisors at KPMG or the contacts mentioned below.