Royal Decree 121/2020 (Oman VAT Law) for the implementation of Value Added Tax (VAT) in Oman was published in the Official Gazette on 18 October 2020 and will be effective 180 days after publication. Oman will, therefore, introduce VAT from 16 April 2021.
The Oman Tax Authority has published the schedule for mandatory VAT registration, summarized below:
# |
Value of annual supplies |
Timeline for registration |
Effective date of registration |
A |
Exceeding RO 1 million |
1 February 2021 to 15 March 2021 |
Friday, 16 April 2021 |
B |
Between RO 1 million to RO 500,000 |
1 April 2021 to 31 May 2021 |
Thursday, 1 July 2021 |
C |
Between RO 499,999 to RO 250,000 |
1 July 2021 to 31 August 2021 |
Friday, 1 October 2021 |
D |
Between RO 249,999 to RO 38,500 |
1 December 2021 to 28 February 2022 |
Friday, 1 April 2022 |
1. Timelines for registration
Persons meeting the threshold for mandatory VAT registration will compulsorily be required to obtain registrations within the timelines specified above. Persons meeting the threshold for voluntary VAT registration may apply for registration anytime on or after 1 February 2021.
2. Value of supplies
The value of supplies for registration purposes will include:
- The value of taxable supplies, standard rated as well as zero-rated, excluding capital assets supplies.
- The value of goods and services supplied to the taxable person and subject to the reverse charge mechanism.
- The value of intra-GCC supplies of goods and services.
For the purposes of voluntary registration, the value of supplies or the value of inputs (expenses) subject to Oman VAT may be considered.
3. Period of supplies
The value of supplies or inputs may be calculated looking back i.e. the current month plus 11 months preceding the current month or looking ahead i.e. the current month plus 11 months succeeding the current month.
Next steps
The VAT registration schedule implies that Oman, like KSA and Bahrain, will stagger the introduction of VAT. This means that until the VAT registration schedule runs its course some businesses would be registered while others may not. As a result, businesses that are not registered for VAT could make purchases from businesses that are registered for VAT and incur input VAT. In the absence of a mechanism or compliance with the mechanism for recovery of pre-registration input tax credit, this input VAT could become a cost to the purchasing business.
To avoid tax leakage, and keep administration and compliance simple, it will be important for businesses to plan, among other things, their registration and procurement strategies. With implementation inching closer, it is critical that businesses 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.
