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:
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:
Exempt supplies include:
In addition, the following supplies could be exempt or zero rated:
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.