Introduction to Oman VAT


Pratibha Devasenapathy | Updated on: October 27, 2021

Introduction - VAT in Oman

Oman will introduce a value added tax (VAT) system aligned with the GCC VAT Framework with effect from April 2021 at a standard rate of 5%, with limited zero-ratings but the highest number of exemptions that we have seen so far in the region. Oman becomes the fourth Gulf Cooperation Council (GCC) member state to implement VAT, following the UAE, Kingdom of Saudi Arabia and Bahrain.

VAT implementation in Oman

Tax Authority (TA) announced the start of VAT Registration as of 1st February 2021 until 15th March 2021 for taxable persons with annual supplies exceeding or expected to exceed One million (OMR). The voluntary registration will also be available for taxable persons with annual supplies or expenses exceeding or expected to exceed (19.250) OMR. The registration must be made through Oman’s official Tax Authority's Online Portal.

In the implementation of Value Added Tax Law, the Taxable Persons must register with the Tax Authority according to the following:


Registration Due Date

Effective Date of Registration

If the value of annual supplies exceeds or is expected to exceed 1,000,000 Omani Rials

From February 1, 2021 to March 15, 2021

April 16, 2021

If the value of annual supplies is between 500,000 and 1,000,000 Omani Rials

From April 1, 2021 to May 31, 2021

July 1, 2021

If the annual value of supplies is between 250,000 and 499,999 Omani Rials

From July 1, 2021 to August 31, 2021

October 1, 2021

If the annual value of supplies is between 38,500 and 249,999 Omani Rials

From December 1, 2021 to February 28, 2022

April 1, 2022

Oman VAT implementation date

The person who may voluntarily register for VAT may apply for registration with the Tax Authority at any time starting from February 1, 2021. VAT law comes into force in Oman from April 2021 following Royal Decree No. 121/2020. The country will apply VAT at the standard rate of 5%. Oman becomes the fourth Gulf Cooperation Council (GCC) member state to implement VAT, following the UAE, Kingdom of Saudi Arabia, and Bahrain.

VAT system in Oman

With VAT being implemented across Oman on April 2021, businesses have a limited time to get ready for VAT. Businesses in Oman will be required to self-assess their VAT registration obligation in Oman. Businesses in Oman will need to keep VAT records for a minimum of ten years from the end of the year to which they related. These records will need to be made available for review at any time.

VAT returns must be filed with the tax authority electronically. It's expected that the VAT period will be a minimum of one month, and VAT payments and returns should be filed within 30 days of the end of the tax period. Transactions with non-VAT-implementing GCC states will be treated the same as transactions with non-GCC states. Businesses must comply with the guidelines right from registration to invoicing to filing returns, else hefty fines will be levied.

VAT law in Oman

The VAT Law will set out the general principles for the application of VAT in Oman in line with the Unified GCC Agreement for Value Added Tax (VAT). The VAT was published in the Official Gazette on 18th October 2020 with an effective date for the introduction of VAT in April 2021. Authorities are working in full swing to implement VAT seamlessly across the country. Various initiatives like knowledge sharing guides on VAT, educative/informative sessions, etc are conducted by TA for a smooth transition.

With VAT being on the verge of implementation, it is extremely crucial for a business to become tax compliant. As a business owner, you would obviously want to avoid paying an additional cost in terms of penalties due to non-adherence to these new tax regimes. Business owners must be well-prepared with a complete view of their business transactions, take stock of the supplies they make, determine the value of supplies and be aware of the registration timelines, in order to stay compliant with VAT laws. Take a free demo of TallyPrime today and find out how business management software will help you stay VAT compliant!

How to Get Started with Oman VAT using TallyPrime

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