How to Calculate VAT in Oman?

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Yarab A, Mar-26-2021

VAT being an indirect tax, the levy of tax is going to be at the transactional level. In other words, when you make a taxable supply, you need to calculate the VAT at 5%. That’s exactly what all the registered businesses in Oman will be doing from 16th April,2021. In this article, let’s understand how to calculate vat in Oman.

Vat calculation in Oman

To calculate the VAT, you need to know the taxable value on which the 5% VAT can be calculated. The Oman VAT law states that the taxable value will be the value of consideration before VAT but includes all additional expenses/costs charged by the supplier, any fees and other taxes.

In other words, the taxable value will be the net value just before calculating the VAT.

Vat calculation formula

Taxable Value = Rate of VAT/100

VAT calculation example

Example -1

Ali Electronics is a retail trader in electronic goods. On 1st April,2021, they sold 5 monitors to Mr Abdul at 80 OMR each. Now, Ali Electronics will calculate the VAT as below:

Monitors = 5 Pcs X 80 OMR = 400 OMR

Taxable Value = 400 OMR

VAT Rate = 5%

VAT Amount = 400 x5/100 = 20 OMR

As mentioned above, the VAT amount that Ali Electronics will charge is 20 OMR and the total invoice value will be 420 OMR including VAT that Mr Abdul should pay.

Example -2

Al-Ameen Traders, a VAT registered business, supplies goods worth 40,000 OMR to National Traders. They also charged 2% of the supply value as packing charges and 20 OMR as transportation charge. The VAT calculation of Al-Ameen Traders will be as below:

Supply Value (a)

40,000 OMR

Packing Charges (2% of 40,000 OMR) (b)

800 OMR

Transportation Charges (c)

20 OMR

Taxable Value (a+b+c)

40,820 OMR

VAT @5% on Taxable Value

2,041OMR

The VAT law states that taxable value should be included with consideration as well as the other expenses charged by the supplier. As a result, Al-Ameen Traders should calculate VAT considering the packing charges and transportation charges.

Example -3

Royal Electronics a registered dealer in electronic goods. On 1st April,2021, they sold 5 monitors at 100 OMR each and allowed a 2% discount. Now, Royal Electronics will calculate the VAT as below.

Supply Value (a)

500 OMR

Discount (2% of 40,000 OMR) (b)

10 OMR

Taxable Value (a-b)

490 OMR

VAT @5% on Taxable Value

24.5 OMR

In the above example, the taxable value is arrived at after reducing the discount from the supply value and on the net value, VAT is calculated. It is expected that discount will be allowed to be reduced from the taxable value and, specific conditions on discount treatment will be issued in Oman VAT regulation.

From 16th April, 2021, VAT calculation is going to be a key aspect of all the registered businesses, and it is of utmost importance that you get it right. Using VAT software will help you automate the calculations and to generate an accurate invoice. TallyPrime, a business management software now supports the VAT compliance for Oman VAT.

Using TallyPrime, you generate accurate invoices, automated calculation on different types of supplies, bilingual invoices and much more to manage your VAT compliance. Book a free demo!

Read more about Oman VAT

Introduction to Oman VATVAT Rate in OmanWho Should Register Under Oman VATVAT Registration Guide in OmanVAT Registration Deadline in OmanWhat is VAT and How does it workZero-Rated supplies in Oman VATExempt Supplies in Oman VATVAT Invoice in Oman, Stay VAT Compliant with TallyPrime

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