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VAT in Oman

June 23, 2023


VAT in Oman


What is VAT in Oman?


Oman introduced a value-added tax (VAT) on April 16, 2021, making it the fourth member of the Gulf Cooperation Council (GCC) to introduce this tax. Oman has undergone a tremendous transformation with the introduction of a value-added tax (VAT). As of October 18, 2020, the Sultanate of Oman Tax Authority published the VAT law in its official gazette. Businesses must register and comply with tax rules. Accoxi is cloud-based accounting software where you can save all your accounting data. Here we discuss Oman's VAT rate, VAT registration, VAT returns, VAT penalties, VAT refunds, VAT records, and the limitation period of the VAT law.


VAT rate in Oman


Oman's standard VAT rate is 5%, implemented by the Sultanate of Oman Tax Authority. VAT rates are classified as standard rate, zero rate, and exempt rate.   


Standard Rate:

5% on all goods and services


Zero rates:

The zero rate VAT is charged at 0%, and taxpayers can claim input tax for exporting goods and services outside Oman, international transportation services, and basic food items.


Exempted VAT rate:

The exempted VAT rate that does not charge VAT and cannot be claimed for VAT. Exports, certain financial services, and basic foodstuffs are among the supplies that will not be taxed at all or be exempt from taxation


VAT Registration   

In Oman, businesses must register for VAT if their annual taxable turnover exceeds OMR 38,500. Above OMR 19,250, voluntary registration is possible. Regardless of the threshold, non-resident businesses that provide taxable supplies must register for VAT. Businesses can apply for VAT registration through an online portal or an application form.


The business must register for VAT under the following conditions:


  • When the annual supply exceeds or is expected to exceed 1,00,000 Omani Rials.
  • There is an annual supply of between 5,00000 and 1000000 Omani rials.
  • Supply between 250,000 and 499,999 Omani riyals annually.
  • The annual supply is between 38,500 and 249,999 Omani riyals.


Here are some definite things to note while doing VAT registration:


When registering for VAT, you must enter all the relevant information accurately. Accoxi, helps you protect all your accounting transactions with data backups. Here are some important points to check before submitting for VAT registration.:


  • Tax identification number
  • Excise tax identification number
  • Customs identification number
  • Business legal form
  • Business address
  • Phone number
  • Email ID:
  • Situations requiring special zone registration
  • Customs suspension


 VAT Return   


VAT-registered businesses must submit a VAT return and submit VAT to the Sultanate of Oman Tax Authority. A VAT return is a document filed with the taxation authorities indicating the amount of taxes to be paid or refunded to the government. VAT returns are due 30 days after the quarter ends.

VAT return and payment will be extended if the next working day is a holiday or weekend. If the VAT payment is late, you must pay an additional 1% each month.


Penalties for VAT in Oman


The Sultanate of Oman's tax authorities penalize and fine taxpayers who violate VAT laws and rules. Here are some VAT penalties and fines:


The nature of the offense

Penalty or a fine

  • Late filing of VAT returns.
  • Not displaying the VAT certificate at the business location.
  • Failure to maintain records, accounting books, and archives under the guidelines

 OMR 500 and OMR 5,000

  • Not reimbursing the incorrect VAT refund received.
  • Based on false documents
  • Unable to obtain VAT registration within the specified timeline
  • Not presenting prices of goods or services at the business location

Between OMR 1,000 and OMR 10,000

  • Incorrect declaration of VAT in returns

1% to 25% of the difference between the stated and actual tax due


  • Fraudulent taxation
300 % of Fraudulent tax evasion


VAT Refunds   


Oman charges a tax on goods and services called VAT (value-added tax). The Omani government has set up a system for refunding VAT to businesses doing business there to make it easier to pay the tax. If certain conditions are met, this system enables businesses to claim back the VAT they paid. The only step to getting a refund is sending the necessary paperwork to the appropriate authorities. These authorities will then determine whether they are eligible for one. Businesses operating in Oman need to know about this procedure because it can help them save money by getting back the tax they paid.


  • VAT refunds when the VAT paid is less than the VAT due or when the VAT paid


  • Travellers on goods purchased in Oman and brought in with their luggage


  • Non-resident Omanians from other countries, foreign governments, military personnel, diplomats, or the OTA (Oman Tax Authority) will announce additional cases through an executive decision.


  • It should be noted that claims for refunds need to be made within five years of the end of the tax period for which the refund is due.



VAT Records


Businesses registered for VAT in Oman are required to keep the relevant records for ten years after the relevant VAT period ends. However, real estate businesses are required to maintain records for fifteen years following the conclusion of the relevant VAT period. The following records must be kept:


  • Daily transactions, invoices for taxes Inventory records, Sales of goods and services within the GCC include imported goods and services, traded goods and services, and customs transactions.


  • Any other records mentioned by the tax authority, or a taxpayer are allowed to be maintained electronically if they comply with the Oman VAT Executive Regulations' requirements.


Limitation Period of Oman's VAT Law:


According to the Oman VAT Law, the Oman tax authority cannot access tax after five years from the tax due date. The tax due date will be extended to the next ten years if registration is not done within the time limit.


Bottom line:    


Therefore, it is important for businesses planning to start a business in Oman to ensure that they follow VAT regulations and rules. In conclusion, Oman’s implementation of the value-added tax (VAT) is a significant step towards increasing revenue generation and building a more sustainable economy. With Accoxi, you can quickly register for Oman VAT as it is integrated with Oman's VAT rates, making it simple to start a business.


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