Oman VAT: Guide on VAT Registration

Introduction

The Oman Tax Authority (TA) issued guide on VAT Registration (Arabic only) providing clarity on the VAT registration process, following the issuance of the Oman VAT law in October 2020. The guide confirms that the go live date for VAT in Oman is 16 April 2021 and the VAT registration will take effect in a phased manner i.e. based on the revenue of the taxable person.

The VAT registration guide has now confirmed that VAT implementation will be phased across a one-year period between April 2021 and April 2022, subject to the taxable person's total turnover, with larger businesses registering first and smaller later.

Who is required to register for VAT?

• Every person with a place of residence in the Sultanate that exceeds or is expected to exceed the annual revenue generated in the Sultanate from a commercial, industrial, or insignificant activity or exceeds the mandatory registration threshold.

• Every person who does not have a place of residence in the Sultanate and is obligated to pay tax, regardless of his income.

Value of taxable supplies

• The value of Taxable Supplies (i.e.standard rated and zero-rated supplies), excluding supplies of Capital Assets.

• The value of goods and services supplied to the taxable person and which are subject to the calculation mechanism (reverse charge).

• The value of intra GCC supplies of goods and services.
  

Calculating the total value of supplies

Before the VAT Law comes into effect

• Actual realised annual supplies are calculated on the basis of the value of supplies (which will be subject to tax upon entry into force of the law) that have been realised during a 12-month period that starts from November 1, 2019 to October 31, 2020.

• The expected annual supplies are calculated based on the value of supplies Which will be subject to tax upon effectiveness of the Law which is expected to be fulfilled within a period of 12 months and which starts from October 1, 2020 to September 30, 2021.
  

After the VAT Law comes into effect

• Actual annual supplies are calculated on the basis of the value of supplies made during a 12-month period that expires at the end of any month.

• The expected annual supplies are calculated on the basis of the value of the supplies that are expected to be realized during the 12-month period that starts from the beginning of any month.
  

Voluntary registration

• Any person who has a place of residence in the Sultanate that exceeds or is expected to exceed the annual revenues generated by him from a commercial, industrial, professional or other activity the voluntary registration limit ( 19,250 OMR ).

• Any person who has a residence in the Sultanate that exceeds or is expected to exceed his annual expenses that he spends in the Sultanate related to a commercial, industrial, professional or other activity, voluntary registration limit ( 19,250 OMR ).

A person who may voluntarily register may apply for his registration to the tax authority at any time starting February 1, 2021.

Phased VAT registration

The specific period during which the person must submit their VAT registration application, and the date from which their VAT certificate will be effective, are:

The date of registration is the date on which the registration becomes effective, and the registered person must comply with all provisions of the law as of this date, such as issuing tax invoices, keeping accounting records, submitting tax declarations and other tax obligations.

Our Comments

The phased approach is good news for smaller and domestic indigenous Omani businesses, as it will provide them the time they need to get familiar with the Oman VAT legislation, understand how VAT will impact their business and sufficiently prepare to be compliant. Larger businesses, however, must submit their VAT registration application by 15 March 2021 if they wish to avoid the risk of a late registration penalty of up to OMR 20,000, as per article 101 of the Oman VAT Law.

While the TA's guide is welcomed so as to support businesses in their VAT registration readiness, experience and insights from the implementation of VAT in a number of the other GCC states reminds us that the initial VAT registration process can often be tedious and time consuming. In particular, the types of documentation which must be submitted with the application tends to cause issues, particularly when evidencing turnover levels or where documents need to be certified, notified and translated into Arabic.