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Oman: VAT expected in early 2021

Oman: VAT expected in early 2021

It is being reported that the Council of Ministers in Oman has referred two laws to the Shura Council—one being a draft value added tax (VAT) law and the other proposing amendments to the income tax law.

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Legislative process

With the referral to the Shura Council, the council now has one month to reach a decision on both proposed laws. The current session of the Shura Council is scheduled to end 16 July 2020, but many believe the session would be extended to allow for a decision on both items. Once the Shura Council acts on the measures, they can be referred to the State Council. At this point, the State Council is required to act (either by approving or amending the measures) within 15 days. Once the State Council reaches its decision on both items, the legislation will be submitted to His Majesty the Sultan, with the opinions of both the Shura and the State Council.


VAT expected in early 2021

Oman, like other countries in the Gulf region, has encountered a slump in international oil prices and economic instability resulting from the coronavirus (COVID-19) pandemic. In reaction, the Ministry of Finance has reduced spending. Oman has aimed at economic diversification. Collections from indirect tax reforms, such as selective or excise tax and VAT, are expected to generate additional revenue.

Oman has been preparing for the introduction of VAT. The referral of the draft VAT measures to the Shura Council appears to indicate that VAT is likely to be implemented in Oman—in early 2021.


Income tax measures

Oman is expected to amend the income tax law to allow, among other things, the automatic exchange of information (AEOI) and country-by-country (CbC) reporting. These are some of the measures as part of Oman’s commitment to implement the four minimum base erosion and profit shifting (BEPS) standards of the OECD.

Oman is also expected to introduce detailed transfer pricing guidelines and documentation regulations to govern arms’ length pricing of transactions between related parties.


For more information, contact a tax professional with KPMG in Oman:

Ashok Hariharan | +96 824 749 231 | ahariharan@kpmg.com

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