On 12 October 2020, His Majesty, the Sultan of Oman, Haitham bin Tariq bin Taimur, issued Royal Decree 121/2020 (Oman VAT Law) for the implementation of VAT in Oman.
The Oman VAT Law is expected to be published in the Official Gazette on 18th October 2020 with an effective date of April 2021. The Oman VAT Executive Regulations are expected to be published in December 2020.
The Oman Tax Authority has published basic, but important information for businesses to begin preparations. Key takeaways from the information published so far, are summarized below:
1. VAT rate: Oman will introduce VAT at the standard rate of 5 percent. Exemptions and zero rating will apply to specified supply of goods and services.
2. VAT registration: Registrations will fall into two categories, mandatory and voluntary. If a business exceeds the mandatory/voluntary registration threshold in (a) the current month plus 11 months preceding the current month; or (b) the current month plus 11 months succeeding the current month, the business shall/may apply for VAT registration in Oman. In addition, a person who does not reside in Oman but who makes supplies in the Sultanate must also register for VAT.
The mandatory registration threshold is OMR 38,500. The voluntary registration threshold is OMR 19,250.
For the purposes of mandatory registration, only the value of supplies will be considered. For the purposes of voluntary registration, the value of supplies as well as inputs (expenses) subject to Oman VAT will be considered.
3. Tax invoices: A detailed tax invoice must be issued for all taxable supplies showing, among others, the amount of VAT due and the net value for each line item. A tax invoice is required to include:
- Reference to “tax invoice”
- Supplier name, address and VATIN
- Customer name and address
- Sequential invoice number
- Date invoice is issued
- Date supply is made
- Description and quantity of goods or services
- Taxable amount and unit price (in OMR)
- Tax rate
- Amount of VAT charged (in OMR)
A simplified tax invoice, with fewer details, can be issued subject to conditions to be specified in this regard.
4. Exemption and zero rating: Certain supplies will not be subject to the standard VAT rate of 5 percent. These could be exempt or zero rated.
Zero-rated supplies include:
- Export of good and services
- Certain healthcare-related goods and services
Exempt supplies include:
- Certain financial services
- Certain education-related goods and services
- Sale of bare land
In addition, the following supplies could be exempt or zero rated:
- Supply of crude oil, oil derivatives and natural gas
- Supply of residential properties
- Supply of specified essential food products
- Local passenger transport
- International goods and passenger transport and specified related services
- Supply of certain means of transport for transporting goods and passengers for commercial purposes, and specified related services
- Supply of investment gold, silver and platinum
- Supply for charities
The Oman Tax Authority will issue further guidance over the next few weeks, but businesses need to immediately consider what steps are necessary in order to be adequately prepared. VAT has a significant impact on every facet of business and therefore requires timely and careful planning. The Oman Tax Authority is allowing businesses more than five months to prepare for VAT implementation. It is critical that entities use this time judiciously.
KPMG has a dedicated team of experienced VAT implementation specialists and advisors based in Oman supported by a larger, experienced regional team. If you need any assistance with VAT implementation in Oman, please reach out to your tax advisors at KPMG or the contacts mentioned below.