VAT and VAT Invoice in Oman
VAT Law in Oman
Oman becomes the fourth Gulf Cooperation Council (GCC) member state to implement VAT, after the UAE, the Kingdom of Saudi Arabia, and Bahrain, with a VAT rate of 5% effective from April 2021. The VAT law will enter into force in Oman from April 2021, following Royal Decree 121/2020. With the VAT Law, companies will be given the responsibility to the state. For this reason, businesses need to register on the online portal of the Oman Tax Authority (OTA).
VAT returns must submit electronically to OTA. The VAT period expects to be at least one month. VAT payments and returns are made within 30 days from the end of the tax period. Transactions with GCC countries that do not apply VAT will be treated in the same way as transactions with countries other than the GCC. The business must follow the guidelines from registration to invoicing and filing of returns. Otherwise, heavy fines will be imposed.
Functional currency in VAT
VAT issue in Omani Rial or any other currency. If the VAT calculates in foreign currency, the tax value calculates in Oman Rial over the average purchase and sale price of the currency issued by the Central Bank of Oman on the tax due date.
The taxable person must maintain regular accounting records and books that record transactions related to the import or export goods and services on time.
Natural and legal persons who need to register for VAT in Oman
In the implementation of the VAT Law, taxable persons must register with UVI according to the following supply values:
- Registration between February 1, 2021, and March 15, 2021, if the value of the annual supply exceeds or expects to exceed 1,000,000 Omani Rials
- Registration between April 1, 2021, and May 31, 2021, if the value of the annual supply is between 500,000 and 1,000,000 Omani Rials
- If the annual supply value is between 250,000 and 499,999 Omani Rials, it must register between July 1, 2021- August 31, 2021.
- If the annual supply value is between 38,500 and 249,999 Omani Rials, it must register between December 1, 2021-28 February 2022.
Oman VAT Law obliges legal entities that meet the following conditions to register VAT with OTA:
- If his residence registers within the borders of the Sultanate of Oman
- Carries out a commercial, industrial or professional activity within the borders of the Sultanate,
- All businesses in the previous 11 months and current month with a supply value that exceeds or anticipates OMR 38,500,
- Natural and legal persons who are not resident within the borders of the Sultanate of Oman must register regardless of the value of the supply if they are obliged to pay taxes for their activities.
Who can voluntarily enroll in VAT in Oman?
Businesses that do not require mandatory registration under VAT offer the option to apply voluntarily for VAT registration. If annual supplies or taxable expenses incurred are not below the voluntary enrollment threshold, the business may enroll voluntarily. The voluntary enrollment threshold is OMR 19,250, which is 50% of the mandatory enrollment threshold.
What is a tax invoice?
Refers to a written or electronic document that the taxable person must issue. It must include the procurement details and all other details following the provisions of the law. Businesses registered under VAT must also order a tax invoice for the supply of taxable goods and services.
When should you file a tax invoice?
According to the Oman VAT Law, a registered business must issue a tax invoice when taxable goods and services are procuring. The taxable person must issue a tax invoice if:
- Provides or is assumed to be providing goods or services
- Totally or partially – charged before the supply date
Tax invoices can issue by third parties on behalf of the taxpayer, provided that the approval of the institution obtains.
Components of the tax invoice
A detailed tax invoice must issue for all taxable items showing, among other things, the amount of VAT due and the net value for each line item.
Requirements for the tax invoice:
- Tax invoice reference
- Supplier name, address, and VAT identification number (VATIN)
- Customer name and address
- Sequential invoice number
- The date the invoice was issued
- Date of supply
- Description and quantity of goods or services
- Taxable amount and unit price (in OMR)
- Tax rate
- VAT amount charged (in OMR)