VAT Rate in Oman

Yarab A | Updated on: May 30, 2022

VAT Rate in Oman
VAT Rate Structure
Key points for businesses to consider in Oman VAT tax
Frequently asked questions

VAT in Oman is expected to be introduced from 16^th April, 2021 and it is all set to become the 4^th GCC member country after UAE, Saudi and Bahrain to do so. The VAT rate in Oman is at 5% which is in line with the GCC framework. Starting 16^th April,2021, a VAT rate of 5% will be levied on the supply of goods and services in the state of Oman.

VAT rate in Oman

While most of the supplies are expected to attract a standard rate of 5% VAT, the Oman Vat law is also provisioned to allow certain exceptions to levy 5% VAT. Certain type of notified supplies will be either exempted or zero-rated

Oman VAT Rate Structure
Rate Type	Rate of Tax
Standard rate	5%
Zero-rated	0%
Exempt rate	Nil

As mentioned above, the Oman VAT tax structure is broadly categorized into standard rate, zero-rated, and exempt rate.

Read Who Should Register Under Oman VAT? to know the types of business and guidelines to register under Oman VAT.

VAT rate structure

Standard rate

All goods and services bought or sold or imported into the Sultanate of Oman are subject to VAT and a standard rate of 5% VAT will be levied on all such supplies. The businesses registered under Oman VAT are responsible to levy VAT @ 5% on such supplies, collect it from their customers and remit it to the government.

Zero-rated supplies

Zero-rated supplies are taxable supplies but are taxed at a 0% VAT. In other words, certain notified supplies, mostly exports, are treated as zero-rated meaning a nil rate of tax will be levied. Though they are taxed at 0% VAT, registered businesses can still claim input VAT on purchases and receive VAT refunds.

Exempt supplies

Exempt supplies are those that do not attract VAT. In simple words, a supplier of exempt supplies does not collect or charge VAT on its sales and also not allowed to claim the input VAT paid on its purchases.

Key points for businesses to consider in Oman VAT tax

Since the businesses are required to collect VAT at 5% only on taxable supplies excluding the zero-rated supplies, businesses must understand the supplies they are making
Determine if any of your supplies are of zero-rated or exempt supplies
If none of your supplies are under the zero-rated list and exempt list, it is understood that all your supplies are taxable supplies and you need to charge VAT at 5%
If few of your supplies are under zero-rated list or exempt list, except those, all others will be taxable supplies and you need to charge VAT at 5%.

Oman VAT regulations

The Oman VAT regulations deliver further guidance on various key areas and summarize the rules, policies, and prerequisites of various facets of the VAT Law, including:

Supplies, deemed supplies, composite supplies, and multiple supplies
Place of supply provisions, comprising services like real estate , telecommunication, and electronically supplied
VAT tax point for goods and services, comprising vouchers and consignment sales
Resolution of the value of supplies (including market value for related party transactions);
Limited exemption and capital goods adjustment rules;
Transaction details that authorize as exempt or zero-rated supplies;
VAT applicability on custom duty suspension and special zones provisions;
Registration, tax grouping, and deregistration;
Tax invoices, return filing, and record keeping;
Tax oversight, inspection, collection, and VAT refund of VAT
Key administrative matters, including penalty provisions

Key features of the VAT regulations

VAT exemption and zero-rating

The guidelines provide subtleties and explanation of the scope, conditions, limits, and degree of VAT zero-rating and exemption from VAT.

VAT zero-rating will apply to specific transactions within the following regions: supplies of and transactions connected with provisions of oil, oil subsidiaries, and gas; exports of good and service, supplies of specific food items; international goods and passenger transport; supplies of investment gold, silver, and platinum; supplies to customs duty suspension and special zones; and supplies of specific drugs and clinical gear.VAT exemption will apply to specific supplies including financial services, educational services, healthcare, and real estate relating to private properties.

VAT compliance

The guidelines determine specific compliance prerequisites applicable to all VAT taxable people. A taxable individual who doesn't agree with the requirements could be subject to regulatory penalties recommended under the law and guidelines.

Tax invoices

The rule require all taxable individuals to give a tax invoice for every taxable supply consisting deemed supplies and against receipt of advances. A complete tax invoice must contain:

The term "tax invoice;"
Date details of the day of issuance of the invoice, the date of the supply, and the payment date
Invoice serial number
The supplier's full name, address, and TIN
The customer's full name, address, and TIN (if any);
Good and services description;
The quantity of goods;
Advance payment date, if any;
The total consideration excluding VAT;
The applicable VAT rate;
Any price discounts, reductions given to the consumer, or subsidies given by the state that were not added in the value of the consideration excluding VAT;
The taxable value of the supply; and
The amount of VAT due.

Simplified tax invoice

The rules also give the option to allocate a simplified tax invoice with less information as compared to a full tax invoice.

Tax period and VAT returns filing

VAT returns for all individual taxpayers will be based on the calendar quarters ending 31 March, 30 June, 30 September, and 31 December. The taxable individual will be needed to file a VAT return electronically through the online portal within 30 days from the end of the tax period in the form to be defined by the OTA.

VAT refunds

The rules also set out the procedure for getting a VAT refund. The refund application must be raised in the form to be specified by the OTA, declaring the refund amount requested, the cause for the refund, and the tax period to which it connects. A taxable individual can claim a VAT refund wherein the VAT expended surpasses the VAT due, or in respect of VAT paid by:

Non-resident individuals of Oman
Foreign governments, military personnel, or diplomats
Travelers on goods bought in Oman and brought in their personal luggage; or
OTA will be further stating other cases via an executive decision.

It is to be note that the refund claims must be raised within 5 years from the end of the tax period in which the refund becomes due.

Record Maintenance

The VAT rule defines the records needed to be managed by a taxable individual:

Day by day transaction records in an ordered and sequential way;
Inventory record of stock items, the financial plan, and the aggregate amount of stock;
Records and reports connected with provisions of imported and traded goods and services;
Records and reports connected with intra Gulf Cooperation Council supplies of goods and services;
Records and reports connected with all custom transactions;
All tax invoice and different reports issued by the taxable individual;
Any other records that incorporate data important to decide the right tax treatment.

Appeals and administrative penalties

The guidelines characterize the process for a taxable individual to object to a tax assessment, tax return adjustment, or enrollment decision made by the OTA. Objections should be submitted in Arabic.

Regulatory penalties of OMR 500 to OMR 5,000 are defined for specific offenses, including inability to:

Submit VAT returns within the predefined time-frame;
Show a VAT enrollment certificate in a noticeable spot as expected by the guidelines; and
Keep records, accounting books, and archives as per the guidelines.

For offenses including the accompanying theadministrative penalties range from OMR 1,000 to OMR 10,000:

Getting a VAT discount in light of mistaken records or subtleties;
Inability to present a solicitation to drop the enlistment where this is necessary under the law and guidelines;
Inability to reimburse erroneously recuperated VAT subsequent to becoming mindful of the mistake; and
Inability to provide cost estimates of labor and products comprehensive of VAT.

Read Who Should Register Under Oman VAT? to know the types of business and guidelines to register under Oman VAT.

Frequently asked questions

What is the VAT rate in Oman?

A rate of 5% will be levied on the supply of goods and services in the state of Oman.

Is there any VAT in Oman?

Yes. Oman implemented a new VAT system in April 2021 which attracts 5% VAT on all supplies of goods and services in the country.

What is Oman zero-rated VAT?

Zero-rated supplies refer to the taxable supply on which VAT is charged at a zero rate. As the name suggests, on these supplies, VAT will be charged at 0%. The reason why zero-rated supplies are included under the taxable supplies bracket is to enable businesses to claim input Vat deduction on it. In simple words, you will be allowed to claim the VAT paid on the purchases though you will not be charging the VAT on your sale.