Majesty of Oman issued Royal Decree no. 121/2020 on 12th October 2020 to implement Value Added Tax (VAT) in Oman. Also, the Sultanate of Oman Tax Authority published the VAT law in the Official Gazette on 18th October 2020. VAT has been implemented in Oman w.e.f 16th April 2021.
This article explains the basics of VAT, including registration, VAT rates, input tax deduction, VAT returns, penalties and many more.
Sultanate of Oman Tax Authority announced a standard VAT rate of 5%. The authority decided the VAT rate considering the Gulf Cooperation Council (GCC) Unified Agreement and global standards.
VAT law in Oman mandates that businesses must mandatorily obtain VAT registration if the total value of supplies in a year exceeds or is expected to exceed Oman Riyal (OMR) 38,500. Also, businesses in Oman can voluntarily obtain registration if the total supplies or expenditures in a year exceed or are expected to exceed OMR 19,250.
Businesses in Oman can complete the VAT registration process online mode.
There are different types of supplies under VAT in Oman. The VAT rates are decided based on the nature of the goods or services.
Businesses in Oman shall keep the below documents to claim the input tax paid on the purchases:
The Oman VAT-registered businesses must keep the relevant records for ten years from the end of the relevant VAT period. However, real estate businesses shall maintain records for 15 years from the end of the relevant VAT period. Below is the list of records to be maintained:
A taxpayer can maintain records in electronic format following the conditions specified in the Oman VAT Executive Regulations.
VAT-registered businesses shall submit the VAT return and make payment of VAT liability every quarter electronically to the Sultanate of Oman Tax Authority. The due date for filing a VAT return and payment of VAT liability is 30 days from the end of the quarter.
The due date for filing a VAT return and VAT payment will be extended to the next working day if the due date happens to be a public holiday or a weekend.
If you are late in VAT payment, you shall pay additional tax at 1% per month or part thereof.
Sultanate of Oman Tax Authority has a right to impose penalties and fines on taxpayers whenever there is any violation of VAT law or rules. The below table explains the nature of the offence and its related penalties:
Nature of Offence
Penalty or Fine
|Late filing of VAT returns||Between OMR 500 to OMR 5,000|
|Not displaying VAT certificate in the business place|
|Failure to keep records, accounting books and archives as per the guidelines|
|Claiming VAT refunds based on false documents||Between OMR 1,000 to OMR 10,000|
|Not reimbursing the received incorrect VAT refund|
|Unable to obtain VAT registration within the specified timeline|
|Not presenting prices of goods or services at the business place|
|Incorrect declaration of VAT in returns||1% to 25% of the difference between actual and declared tax due|
|Tax evasion||300% of the tax evaded|