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Oman new VAT law: no minimum threshold for non-resident registration

Oman has previously announced the introduction of 5% VAT, aimed at driving economic growth in the Gulf state. 

Oman’s VAT Law has now been published and will come into force on 16 April 2021.

The law has important implications for non-resident businesses that wish to do business in Oman.

No threshold for nonresident registration

Nonresident businesses performing any activities that are liable to tax are required to register for VAT in Oman. 

Note that, unlike resident businesses, there will be no minimum threshold that needs to be met before nonresident businesses must register for VAT with Omani authorities. 

To help facilitate registration and compliance, nonresident businesses will be able to appoint a tax agent in Oman. Further details are expected to be issued by the relevant authorities. 

Digital services and goods from abroad

Rules pertaining to digital service providers based outside of Oman are still in development. 

Digital service providers based outside of Oman, as well as e-commerce services, will need to pay careful attention to regulations over the coming months to ensure compliance. 

Any outside business that provides goods or services to clients or customers based inside Oman will therefore need to pay attention to regulations as they develop and act accordingly.

Filing and record-keeping

The law sets out rules for proper record keeping and invoicing. All VAT-registered entities must keep specified records, including customs and invoicing documentation, and retain these records for at least 10 years.

The law also specifies mandatory filing requirements, including documentation required when filing VAT returns. 

Sanction and systems

While many details of the new regulatory environment still need to be developed, Oman’s 

authorities have outlined penalties for compliance failures.

As is to be expected, any company found to have kept inadequate records or issued incomplete invoices may be subject to potentially severe fines.

That upshot is that while businesses operating in Oman will need to get a handle on the relevant tax regulations, they will also need to ensure that they have adequate systems in place to effectively record, organise and file all relevant documentation in accordance with those rules. 

Managing the transition

As the law is yet to come into effect, another potential complication needs to be considered. What about instances in which goods or services are paid for prior to the law coming into effect, but are only delivered once the law is in place?

The regulations indicate that VAT will have to be paid in such circumstances. However, further questions are raised in terms of invoicing and filing.

More details are expected to be provided on precisely how compliance will function under these transitional circumstances. Businesses will likely benefit from a consultation with VAT experts, to ensure that compliance is met at all points of the transitional phase and that the necessary internal systems and protocols are in place as soon as they are required. 

While the central elements of Oman’s VAT legislation are in place, many finer details still need to be worked out and communicated to the public. Businesses need to pay close attention to these developments, even if they are based outside of the country and provide services to consumers in Oman.

Vatglobal is closely monitoring new developments in Oman’s tax code. Get in touch with us to find out how your business can achieve full compliance, including automated record-keeping and seamless filing.   

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