What are the Taxable Goods and Services Under VAT in Oman?


Pratibha Devasenapathy | Updated on: October 27, 2021

Companies supplying taxable goods or services in Oman will need to comply with the new VAT laws from April 2021. VAT law came into force in Oman from April 2021 following Royal Decree No. 121/2020, which was published in the official gazette on 18 October 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.

What is VAT?

VAT registration threshold

The mandatory VAT registration threshold is OMR 38,500. However, it is possible to apply for a voluntary registration above OMR 19,250. The threshold is based on annual sales for the rolling preceding 12 months. The Oman VAT law mandates every person who conducts economic activity and has a place of residence in the sultanate, should apply for VAT registration. In other words, any person who meets the following conditions should register under Oman VAT.

  • Has a place of residence in Oman
  • Conducts a commercial, industrial, professional, or other activity in the Sultanate
  • The annual supplies exceed or is expected to exceed the registration threshold as prescribed by the law
  • In the case of a non-resident, businesses should register regardless of the value of supplies made, if they are obligated to pay tax on the supplies they make.
Who should register under VAT

What are taxable supplies?

The supplies on which tax is charged at the standard or zero rates, and the input tax related thereto is deductible according to the provision of this Law.

Exempt supplies in Oman VAT


Zero-Rated supplies in Oman VAT

List of supplies under taxable supplies

The tax shall be imposed on the following transactions:

  • The supply of goods or services by the Taxable Person in the Sultanate, including the Deemed Supply
  • The taxable customer who receives goods or services from a supplier who has no place of residence in the Sultanate and is not subject to tax in the Sultanate in the cases where the Reverse Charge Mechanism is applied
  • Import of goods

The supply of goods means, in the application of this Law, the transfer of ownership of the goods or to dispose of them as an owner, including in particular, the following:

  • Assigning possession of goods under an agreement which stipulates the transfer of ownership of these goods, or the possibility of transferring it subsequent to the date of the agreement, on a date no later than the date when consideration is paid in full
  • Granting of rights in rem branching from ownership
  • Seizing ownership of goods compulsorily for consideration in accordance with the relevant laws.

In the event that the Taxable Person receives goods or services from a supplier who has a place of residence in any of the GCC states, he shall be considered as if he has supplied these goods or services to himself. Such supply shall be subject to tax according to the Reverse Calculation (Charge) Mechanism.

If a Taxable Person receives services from a supplier who has no place of residence in any of the GCC States, he shall be considered as if he has supplied the services to himself. Such supply shall be subject to tax in accordance with the Reverse Calculation (Charge) Mechanism.

Businesses need to consider what steps are necessary in order to be adequately prepared for VAT implementation, given that VAT will have significant implications on every facet of the business.

Take a free demo of TallyPrime today and find out how business management software will help transit to the VAT regime.

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