VAT Guide

Oman VAT Guide


Jay Duseja
Oman VAT specialist

jay@mmjs.co

This guide is an overview of the Sultanate of Oman’s Value Added Tax (“VAT”) system, focussed on how it affects foreign businesses trading with Oman. It is general in nature and unlikely to cover the specifics of your scenario. It should be read as such and not be construed as advice. For advice as to how your business is affected by Oman VAT, please contact a Kreston Global Oman VAT specialist.


What is the tax called?

VAT – Value Added Tax

What is the tax authority?

Oman Tax Authority (OTA)

What type of tax is it?

Consumption based tax on Import, Export and Local Supply of Goods or Services to end consumers or businesses.

What is it due on?

VAT is added to the sales value / taxable value of supplies of goods and services where the ‘place of supply’ is Oman

What are the VAT rates?

Taxable:
5% – default (standard) rate
0% – zero-rate
Exempt: specific goods or services
Out-of-scope: specific goods or services

5% – Standard Rate on all goods and services which are not zero-rated, exempt, or out-of-scope.

0% – zero-rate:
– Exports of goods and services
– International transportation of goods and passengers
– Supply of means of transport
– Food items (513 items)
– Oil, oil derivatives, and natural gas
– Investment gold, silver, and platinum
– Medicines and medical equipment
– Supply of rescue planes, and rescue and assistance boats

Exempt:
– Healthcare services and related Goods and Services
– Education services and related Goods and Services
– Financial Services
– Undeveloped land (bare land)
– Resale of residential properties
– Local passenger transport
– Rental of properties for residential properties

What does a VAT number look like?

OMXXXXXXXXXX (twelve digits)

Is there a registration limit?

Mandatory registration threshold for resident in Oman – Taxable supplies of OMR 38,500 (Approx USD 100,000) during the 12 preceding months or expected in the next 12 months.

Voluntary registration threshold for resident in Oman – Taxable supplies of OMR 19,250 (Approx USD 50,000) during the 12 preceding months or expected in the next 12 months.

Registration threshold for non-resident in Oman – Nil

When does a non-established entity need to register?

For Non-Resident businesses/ individuals the above thresholds do not apply. Such a business/ individual must register for VAT from the date on which he is obliged to pay VAT in Oman irrespective of value unless another Person is obligated to pay the VAT in Oman on supplies made by the Non-Resident.

When is the place of supply in Oman?

The place of supply of Goods is in the Sultanate in the following two cases:

– If the Goods are put at the disposal of the Customer in the Sultanate, in relation to a supply without dispatch or transportation.
– If the Goods are in the Sultanate at the start of transportation or dispatch made by a Supplier or to the account of the Customer, in relation to a supply with dispatch or transportation.

The place of supply of Services is in the Sultanate:

– If the taxable Supplier has a Place of Residence in it, provided the Customer is not taxable and not registered in any GCC state.

Otherwise, the place of supply of Services, shall be at the Customer’s Place of Residence.

Any special rules?

The VAT Law sets out special place of supply rules for services. These rules are summarized below:

– Transport Services of Goods and passengers, and related Services shall be at the place where transportation begins.

– The Services related to real estate shall be at the place where the property is located.

– The rental Services of means of transport by a taxable Supplier to a non-taxable Customer shall be at the place where the means of transport are put at the Customer’s disposal.

– The wired and wireless telecommunication Services and electronically supplied Services shall be at the place of actual use or benefit of these Services.

– The place of supply of restaurant and hotel Services, provision of food and beverages, cultural, artistic, sport, educational and recreational Services and Services related to Goods transported and supplied to a non-taxable Customer, is the place of actual performance.

Does a non-established entity need a fiscal representative?

Fiscal representation is not required for non-established entity in Oman. A non-established may appoint a tax representative resident in Oman, duly approved by the OTA to act as tax representative, by way of an official power of attorney.

How often do VAT returns need to be submitted?

VAT Returns are to be submitted online on the portal on a Quarterly basis.

Tax return to be filed within 30 days following the end of the tax period.

Are penalties imposed for late registration?

An imprisonment penalty of not less than 1 year, and not more than 3 year; or fine of not less than OMR 5,000 and not exceeding OMR 20,000 in case a person who is required to register fails to register during the date stipulated by the Law.

Are penalties imposed in other circumstances?

An administrative fine of not less than OMR 500 and not exceeding OMR 5,000 can be levied for below:

– Failure to submit tax declaration on the specified date
– Failure to display VAT registration certificate in a visible place
– Failure to keep records, accounting books and documents by a taxable person whose registration is cancelled

An administrative fine of not less than OMR 1,000 and not exceeding OMR 10,000 can be levied for below:

– Refund of tax value based on incorrect document and data
– Taxable person fails to submit an application to cancel VAT registration in compulsory cases
– Failure to pay the VAT amount which was accidently recovered by a person who becomes aware of the error
– Failure by a taxable person to submit the prices of goods and services including tax

An imprisonment penalty of not less than 2 months, and not more than 1 year; or fine of not less than OMR 1,000 and not exceeding OMR 10,000; or both can be levied for below:

– Fails to display prices as ‘inclusive of VAT’
– Fails to submit a tax return for any period
– Taxable Person fails to maintain accounting records
– Non issuance or Issuing incorrect tax invoice

An imprisonment penalty of not less than 1 year, and not more than 3 year; or fine of not less than OMR 5,000 and not exceeding OMR 20,000; or both can be levied for below:

– Refraining from registration
– Refraining from providing correct information in your return
– Submitting forged tax returns, documents or records
– Destroying, hiding, or dispossessing any document, record when requested by authorities
– Supporting taxable person in submitting incorrect returns and records

Can VAT incurred by overseas businesses be recovered?

Non-Resident Persons that are not registered for VAT in Oman may claim a refund on the VAT paid on purchases made within Oman if following criteria is met:

– The refund applicant is not registered or obliged to register for VAT in Oman
– The applicant who has no place of residence in Oman or in any of the GCC States and does not supply goods or services for which he is required to pay Tax in Oman or in any of the GCC States.
– The refund applicant is registered for VAT or any other similar tax in their country of residence
– The refund applicant is entitled to claim a VAT refund if the total VAT claimed is equal to OMR 100 (USD 260.07) or more
– The VAT refund is being claimed for supplies used to conduct their business activity
– The refund applicant has not already submitted a refund application for the same calendar year
– The refund applications are to be submitted with supporting documents on a half-yearly basis within 6 months from end of the period.

Can VAT be deducted?

A taxable person is entitled to deduct input VAT paid or payable by him on costs incurred while carrying out his economic activity for the purposes of making taxable supplies, including supplies subject to the zero rate.

VAT on expenditure used in connection with exempt supplies cannot be deducted.

Input VAT can be claimed within 3 years from the end of the period in which right to deduction arose.

Do I need to issue an invoice?

A taxable person must issue Tax Invoice in respect of supplies of goods and services made by him in Oman, whether these supplies are made to resident persons or to non-resident persons.

Other

Oman VAT law provides for concept of reverse charge mechanism.

Under the reverse charge mechanism, the VAT liability for certain taxable supplies is shifted from the supplier to the customer. The customer, if registered for VAT in the Oman imports services for the purposes of his business, he shall be treated as making a taxable supply to himself and shall be responsible for all applicable tax obligations and accounting for due tax in respect of such supplies.

In Oman, the reverse-charge mechanism is applicable by default for supplies of services subject to VAT in Oman when purchased by a customer registered for VAT in Oman from a supplier who is non-resident in Oman.

From a practical point of view in B2B cases, the reverse charge mechanism allows for a non-resident supplier to supply goods or services subject to VAT in Oman without being required to register for VAT in Oman.

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