The Sultanate of Oman, in an effort to smoothly implement VAT, has introduced VAT registration in a phased-in manner. Businesses with annual supplies (in other words, standard-rated supplies, zero-rated supplies, and supplies liable to the reverse-charge mechanism) exceeding 1,000,000 Omani Riyal (OMR) are required to register for VAT effective beginning 16 April 2021. Businesses with annual supplies between 1,000,000 OMR and 500,000 OMR are required to register for VAT effective from 1 July 2021, and businesses with annual supplies between 499,999 OMR and 250,000 OMR are required to register for VAT effective from 1 October 2021. Businesses having annual supplies exceeding 38,500 OMR are required to register for VAT effective from 1 April 2022. Businesses with annual supplies over the threshold of 19,250 OMR may voluntarily register for VAT at any time.
VAT zero-rating of basic food items
Pursuant to Royal Decree No. 121/2020 (VAT law), the Oman Tax Authority has published a list of 94 basic food items that are subject to VAT at the zero rate beginning 16 April 2021. As a result, businesses in Oman that trade in food items need to understand the Decree provisions, evaluate its applicability, and take appropriate action before then.
Like other Gulf Cooperating Council (GCC) states, businesses in Oman are eagerly looking forward to VAT regulations and sector-specific guidance notes to understand the VAT treatment of peculiar transactions associated with various sectors in the Sultanate.