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Oman Vat Law

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Oman Vat Law

Oman VAT Law and its impacts Everything you need to know :

Oman VAT: reality

Oman Royal Decree No. 121/2020, promulgating the Value Added Tax (VAT) Law, was published in Arabic in the Official Gazette 1362 on 18 October 2020. The Law will go live on 16 April 2021, 180 days from the date of its publication in the Official Gazette.

This alert highlights what we think currently are the key aspects of the Law.

What do you need to know?

The framework of the Law: The Law is divided into 13 Chapters and has 106 Articles. More details on exactly how some of the main decisions work will be in the Executive Regulations, which are to be released within the next two months. The standard rate of VAT will be 5% on go-live, with certain supplies being zero-rated or exempt from VAT.

Scope of VAT: The ambit of the tax is very wide under the Law (Chapter 2). VAT applies to transactions in most goods and services. Note that the tax would also be applicable to the importation of goods and services into Oman. Certain transactions – gifts, free samples, or private use of business assets – are treated as “deemed” supplies and fall within the purview of VAT.

 

Penalties:

No round-up of any VAT law is complete without an examination of the penalty regime. In case of violation or non-fulfillment of the obligations under the Law, stringent penalty provisions will be applicable under Chapter 12.

A general penalty of OMR 1,000 up to OMR 10,000 and imprisonment from two months up to one year is prescribed under the Law for certain deliberate offenses like:

  • Refraining from identifying responsible persons,
  • Not informing the OTA of any change in the registration,
  • Failure to submit a tax return,
  • Not maintaining proper records and books, and
  • Improper tax invoicing, amongst others.

Penalties are also stipulated under the Law for more severe, criminal or repeated offenses.

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