Essentials of VAT compliance in Oman

With a VAT implementation date of April 2021, businesses have a limited time to get ready for VAT. Based on our experience across the region, we have set out below essentials of VAT readiness which every business seeking to be compliant with the VAT law should ensure can be fulfilled at the VAT go-live date.

VAT registration

Businesses in Oman will be required to self-assess their VAT registration obligation in Oman. It is anticipated that the Tax Authority will announce VAT registration thresholds that, if breached, a business should be required to submit a VAT registration application. Generally, and for the purposes of VAT registration, businesses are required to calculate their 12-month historic or expected taxable turnover. Whilst the thresholds are yet to be announced, it is expected that the Tax Authority will introduce two thresholds whereby if you breach one you are mandated to register, whereas if you breach the other you have the option to register for VAT.

VAT invoices

VAT is known to be a document driven tax, and tax invoices are amongst the key documents driving VAT compliance. All taxable businesses will be required to issue valid tax invoices for all taxable supplies made by them, and similarly receive valid tax invoices for all purchases. It is anticipated that the VAT implementing

Regulations will outline 9-13 requirements that must appear on an invoice for it to be considered a valid tax invoice. Non-VAT compliant invoices can be rejected by customers and may subject the business to penalties to be applied by the Tax Authority in accordance with the provisions of the VAT Law.

VAT returns

A key aspect of VAT compliance is submitting a periodic VAT return after each tax period. Tax periods are generally not less than one month and can be calendar quarters. It is expected that in Oman, VAT returns will be due at the end of the month following the end of the tax period. In the VAT return businesses are expected to submit values of their turnover, categorised into the different VAT treatments, in addition to the total output and input VAT amounts and the net VAT amount payable or refundable.

Record keeping

As outlined in the VAT law, businesses will be required to maintain documents relating to VAT for a period of ten (10) years from the end of the year in which the tax return is filed. These documents include tax invoices, accounting records and books, customs documents relating to the importation and exportation or goods and any other document relating to the provisions of the Oman VAT law. This period is extended to fifteen (15) years for transactions relating to real estate.

VAT transition

Businesses in the KSA, the UAE and Bahrain faced many challenges with supplies which spanned across the VAT implementation date. The Oman VAT Law has introduced certain transitional provisions which govern such supplies. As such, businesses should carefully assess the application of the transitional provisions to their long-term contracts and take appropriate steps to address those matters.

(Alkesh may be contacted at: Alkesh.Joshi@om.ey.com for any VAT related clarifications)