VAT in Oman: What is it and How Does it Affect Your Business?

Value Added Tax or VAT in Oman is a key component of the Sultanate’s efforts to reduce the oil dependency of the economy. This type of tax in Oman is levied on goods and services at each stage of the supply chain, from production to the final sale. Businesses collect VAT on behalf of the government, making it an indirect tax that is borne by the consumer. At each stage of the supply chain, businesses charge VAT on their sales (output tax) and reclaim VAT paid on their purchases (input tax).

VAT in Oman aligns with international tax standards and is administered by the Oman Tax Authority. Read this article to learn more about VAT for your business - from rates to returns.

What is the VAT Rate in Oman and why is it important?

Wondering what the VAT rate in Oman is? It's set at a standard VAT rate of 5 per cent, and is  applicable on most goods and services. There are certain essential items that do not qualify for the standard rate. These items include:

Zero-rated supplies: No VAT is charged on the supplies of basic food products, medicines, and specific goods and services. Businesses can claim input VAT on zero-rated supplies.

Exempt supplies: Services such as healthcare and education are exempt from VAT in Oman. Businesses cannot claim input VAT on exempt supplies.

The introduction of VAT in Oman reflects a pivotal shift in the tax landscape of the Sultanate. Upon successful company registration in Oman, you must comply with VAT regulations and maintain accurate record-keeping to avoid penalties. Thus, a thorough understanding of VAT,   its rate, and  how it applies is essential for both businesses and consumers.

VAT Registration in Oman

Companies must adhere to the Oman VAT implementation law and register for it. If the total value of taxable supplies and imports exceeds OMR 38,500 over the past 12 months or is expected to exceed that threshold in the upcoming year, the business must mandatorily register for VAT in Oman. Companies can also choose to register voluntarily if their taxable turnover exceeds OMR 19,250.

For VAT registration, you can contact Commitbiz business setup consultants. Upon successful registration, you will receive a VAT registration certificate and the Oman Tax Identification Number (TIN). Timely VAT registration is crucial to avoid penalties and ensure legal compliance. Once you register for VAT, your business must charge VAT on sales, file VAT returns, and maintain proper records in accordance with the rules set by the Oman Tax Authority.

VAT Returns in Oman

Once you have your business registered for VAT in Oman, Commitbiz can help you submit VAT returns on a quarterly basis. These returns summarise the VAT collected on sales (output tax) and the VAT paid on business purchases (input tax) during the tax period. The difference between the two determines whether your business must pay VAT to the government or if it is eligible for a refund.

VAT return must include details such as standard-rated, zero-rated, and exempt supplies, imports subject to VAT, and input VAT eligible for deduction. VAT returns must be filed by the end of the month following each quarter. Accurate VAT returns filing is essential to avoid administrative penalties. Your business can be fined for late submission, incorrect information, or failure to maintain proper records.

How Can Commitbiz Help?

Compliance with VAT in Oman is crucial for any business. However, understanding the value added tax exemptions and maintaining records takes time. As a type of tax in Oman, VAT requires accurate documentation and timely filings to stay compliant. Consulting knowledgeable experts in the field can reduce errors, help avoid penalties, and ensure full compliance. Benefit from Commitbiz tax services in Oman for hassle-free VAT registration, VAT returns filing, and bookkeeping.

Contact us today for more information.