Businesses should heed stipulated schedule for VAT implementation: Tax Authority

Time-bound strategy: Tax Authority warns Categories B, C and D establishments not to levy new tax ahead of time

Oman’s Tax Authority has cautioned businesses and organisations not to collect Value Added Tax (TAX) on their supplies of goods and services before it becomes obligatory for them to do so in line with a staggered timeline for its implementation in the Sultanate.

The warning comes as social media is rife with complaints from consumers lamenting that they are forced to bear the 5 per cent tax from relatively small and mid-sized establishments as well.

While any business or establishment, regardless of its size, can register under the VAT framework well before the timeframe specified by the Authority, they can however apply the new tax to their supplies only when it becomes effective for their category of establishments.

Presently, only Category A entities — businesses and organisations with a total turnover of RO 1 million and above — are mandated to impose a 5 per cent tax on VAT-eligible goods services. The levy came into force on April 16, 2021 when VAT became a reality for the first time in the Sultanate.

However, Category B entities — those with a total turnover ranging from RO 500,000 to less than RO 1 million — can apply VAT on their goods and services only with effect from July 1, 2021 per the Authority’s timeline.

“No establishment, even if registered with the Tax Authority, is entitled to impose Value Added Tax (VAT) on its supply of goods and services before the effective date for implementation as notified in its tax certificate,” said the Authority in a tweet posted on Tuesday.

Similarly, ‘Category C’ firms with a turnover of between RO 250,000 and less than RO 500,000 come within the ambit of VAT implementation effective from October 1, 2021. Category D entities with turnovers of between RO 38,500 and less than RO 250,000 become eligible to levy VAT only with effect from April 1, 2022.

Oman’s authorities, notably the consumer protection watchdog, have stepped up surveillance of shopping centres and business establishments to ensure that the implementation of VAT is in keeping with the letter and spirit of VAT regulations.