5 percent VAT on most goods and services

Oman began implementing Value Added Tax (VAT) with effect from Friday, April 16, following the end of the six-month transition period set by the VAT law.

With the exception of certain foodstuff items, as well as a selection of certain types of goods and services, VAT now applies at the standard rate of five percent.

Saud bin Nasser al Shukaili, Head of the Tax Authority, said that all preparations had been made ahead of Friday’s roll-out, with a new IT system now linking the relevant authorities with registered business entities.

In addition, the Authority has trained a number of staff in the application of the tax, prepared relevant manuals for all applicable sectors, and also put in place registration procedures.

As many as 488 types of food commodities have been zero rated for VAT following a package of social protection measures implemented by the Omani government on the Royal directives of His Majesty Sultan Haitham bin Tarik. This compares with only 93 food items that were originally exempt.

Food commodities subject to the zero VAT rate are: vegetables, fruits, legumes, cereals, dates, spices, oils, fish, red meat and poultry, as well as dairy, cheese, tea, coffee, sugar, salt and natural juices without sugar or sweeteners.

He said in an earlier statement to ONA that the Executive Regulations issued by the Authority spell out 211 articles distributed over 13 chapters.

They set out, among other things, VAT procedures, registration guidelines, payment and collection of tax, tax invoicing details, and procedures for raising objections and grievances.

The VAT framework, said the official, has been formulated broadly on the lines of global VAT regimes.

Envisaged for implementation in phase, the first set of businesses mandated to register represents those with a high volume of supplies of over RO 1 million per annum.

Nonetheless, registrations opened on a voluntary basis on February 1, 2021 for anyone with annual supplies exceeding the optional registration limit of RO 19,250 — a measure designed to ensure that even small businesses are not denied their rights granted under the VAT Law, notably the recovery of input tax.

He added that two or more persons may register with the agency as a tax group in accordance with the conditions set by the regulation. For the purposes of applying the provisions of the law, the tax group is treated as a taxable person independent of the persons participating in it, and the responsibility of the persons participating in the tax group is in solidarity with each other for the group’s tax obligations that arise during their accession period.

Registered entities have the right to cancel their registration if they stop engaging in activity or stop dealing in taxable supplies, or if the value of their supplies falls below the optional registration limit.

Taxable entities must display the registration certificate in a prominent place at the activity headquarters, write down their tax identification number with the registration certificate on all correspondence, invoices or documents, declarations, notices required to be submitted to the agency and pay the tax due to the taxable supplies, imported goods and issue the tax bill when supplying goods or services, and issue the tax invoice in Omani riyals, or In any currency, if issued in a foreign currency, the value of the tax must be calculated in Omani riyals in accordance with the average purchase and sale price of the currency declared by the Central Bank of Oman on the date of the tax benefit.

The taxable person must submit a tax return on the dates established in this regard, hold regular accounting records and books in which he or she is first restricted to the import or export of goods and goods and services, and the taxable person is obliged to offer the prices of goods and services including tax.