Oman: VAT regime, effective date of April 2021

Oman: VAT regime, effective date of April 2021

Royal Decree 121/2020 (12 October 2020) provides that the value added tax (VAT) regime will be implemented in Oman, effective April 2021.


Related content

The VAT law is expected to be published in the official gazette on 18 October 2020 with an effective date of April 2021. The VAT executive regulations are expected to be published in December 2020.

The Oman tax authority has published basic information for businesses to begin preparations, including the following:

  • VAT rate—Oman will introduce VAT at the standard rate of 5%. Exemptions and zero-rating will apply to specified supply of goods and services.
  • VAT registration—Registrations will fall into two categories: mandatory and voluntary. If a business exceeds the mandatory / voluntary registration threshold in (1) the current month plus 11 months preceding the current month, or (2) the current month plus 11 months succeeding the current month, the business must (may) apply for VAT registration in Oman. In addition, a person who does not reside in Oman but who makes supplies in Oman 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. 
  • 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 VAT identification number (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.

  • Exemption and zero rating—Certain supplies will not be subject to the standard VAT rate of 5%. These could be exempt or zero-rated. Zero-rated supplies include the export of goods and services and certain healthcare-related goods and services. Exempt supplies include certain financial services, certain education-related goods and services, and 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

KPMG observation

The Oman tax authority will issue further guidance over the next few weeks. In the meantime, businesses need to consider what steps are necessary in order to be adequately prepared over the next five months, given that VAT will have significant implications on every facet of business.

Read an October 2020 report prepared by the KPMG member firm in Oman

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