Key points of Oman's VAT Executive Regulations

Introduction

His Excellency Saud bin Nasser Al Shukaili, Head of the Oman Tax Authority (OTA) issued the VAT executive regulations via Ministerial Decision 53/2021. The VAT executive regulations were published in Arabic in the official gazette on 14 March 2021.

Some of the key highlights of the VAT executive regulations are as below:

Tax period and VAT return filing

The taxable person will be required to file a VAT return based on the calendar quarters electronically via the online portal within 30 days from the end of the tax period in the form to be prescribed by the OTA. As per Article 147 of the VAT executive regulation the following are the four tax periods;

• The first tax period: starts on January 1 and ends on March 1

• The second tax period: starts from on 1 and ends on June 10.

• The third tax period: starts on July 1 and ends on September 30.

• The fourth tax period: starts on October 1 and ends on December 31.
  

Tax-exempt supplies

The regulations in Chapter six (from Article 79 to 97) provide details and clarification of the scope, conditions, limitations, and extent of tax-exempt supplies and supplies subject to the zero rate.

VAT zero-rating will apply to certain transactions within the following areas:

• supplies of and transactions related to supplies of oil, oil derivatives, and gas;

• exports of goods and services;

• supplies of certain 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 certain medicines and medical equipment.

In services it would apply to certain supplies relating to;

• financial services (incorporating insurance and Takaful),

• education services,

• healthcare services, and

• real estate transactions relating to residential properties.

Tax invoice

The regulations require taxable person to issue a tax invoice for taxable supply including deemed supplies and against receipt of advances. As per Article 143 of the VAT executive regulation a complete tax invoice must contain the following:

• The term "tax invoice;"

• The date of issuance of the invoice, the date of the supply, and the date of payment;

• The serial number of the invoice;

• The supplier's full name, address, and tax identification number;

• The customer's full name, address, and tax identification number (if any);

• A description of the goods and services;

• The quantity of goods;

• The date of advance payment, if any;

• The total consideration excluding VAT;

• The applicable VAT rate;

• Any price discounts, reductions granted to the customer, or subsidies granted by the state that were not included in the value of the consideration excluding VAT;

• The taxable value of the supply; and

• The amount of VAT due.
  

Simplified tax invoice

The regulations also provide the option to issue a simplified tax invoice with less information than a full tax invoice. This is subject to prior approval by the OTA and the satisfaction of certain conditions. As per Article 147 of the VAT executive regulation a simplified tax invoice must contain the following:

• The phrase “simplified tax invoice”.

• The date of issuance of the simplified tax invoice, date of supply and date of payment.

• The supplier's full name, address, and tax identification number.

• Description of goods and services.

• Quantity of the supplied goods.

• Total amount of consideration without tax.

• The applicable tax rate.

• Any price reductions, discounts granted to the customer, or subsidies granted by the state that are not included in the consideration value without tax.

• Taxable value.

• The value of the tax due.
  

VAT refunds

The regulations in Part Two of Chapter Ten (from Article 184 to 196) provide details for VAT refund. The refund application must be submitted in the form to be prescribed by the OTA, stating the amount of the refund requested, the reason for the refund, and the tax period to which it relates. Refund claims must be submitted within five years from the end of the tax period in which the refund becomes due. A claim of refund may be made where the VAT paid exceeds the VAT due, or in respect of VAT paid by:

• Persons who are not resident in Oman;

• Foreign governments, military personnel, or diplomats, etc.;

• Tourists on goods purchased in Oman and carried in their personal luggage; or

• Other cases to be prescribed by the OTA via an executive decision.

Record Keeping

The regulations in Part Two of Chapter Eight (from Article 156 to 159) provide details for Record Keeping. The records required to be maintained by a taxable person are including but not limited to:

• Daily transaction records in a chronological and sequential manner;

• Inventory record of stock items, the budget, and the total amount of stock;

• Records and documents related to supplies of imported and exported goods and services;

• Records and documents related to intra Gulf Cooperation Council supplies of goods and services;

• Records and documents related to all customs transactions;

• All tax invoices and other documents issued by the taxable person;

• All tax invoices and other documents received by the taxable person; and

• Any other records that include information necessary to determine the correct tax treatment.

Administrative penalties

The regulations in Part One of Chapter Twelve (from Article 202 to 206) provide details for Administrative penalties. Penalties of OMR 500 to OMR 5,000 are specified for certain offenses, including failure to:

• Submit VAT returns within the specified time period;

• Display a VAT registration certificate in a visible place as required by the regulations; and

• Keep records, accounting books, and documents in accordance with the regulations.

Penalties ranging from OMR 1,000 to OMR 10,000 are specified for the following offences;

• Obtaining a VAT refund based on incorrect documents or details;

• Failure to submit a request to cancel the registration where this is compulsory under the law and regulations;

• Failure to repay incorrectly recovered VAT after becoming aware of the error; and

• Failure to quote prices of goods and services inclusive of VAT.

How we can help?

Our team is available to discuss and bring clarity to the specific challenges that your businesses will face in getting ready for VAT, that can be regarding registration, training employees, advisory on a legal position etc.

At Narayan Tax, we have organized VAT work streams that involve impact assessments, service design and implementation, as well as ongoing VAT technical analysis, advisory, training, project and change management.

We can help you through all phases of implementation, providing advice and recommendations for managing VAT compliance, addressing VAT costs and avoiding significant penalties.