How To Register For Vat In Oman

By Author: Rizwan Quadri
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How To Register VAT In Oman

As of 2021, the Sultanate of Oman will be adopting a phased implementation approach, for VAT (Value Added Tax) registration and implementation. The Oman Tax Authority (OAT) released a guide to streamlining and understanding how to register VAT in Oman and how to prepare for it.
What is Value Added Tax or VAT?

Implemented in more than 160 countries around the world, VAT is an indirect tax that’s charged on all goods and services that are bought and sold in the country, excluding some essential goods and services. At every stage of the supply chain, VAT is paid and collected; from the purchase of raw materials by a manufacturer to the sale of a finished product or service, by a retailer to a consumer. The VAT rate in Oman is currently set at 5%.
Key Highlights of the VAT Registration Guide
The VAT Registration Guide includes key steps highlighting all the processes that answer how to register VAT in Oman.

Step 1: Determining whether the person or business is obligated to register for VAT or not.

Step 2: If eligible, determining the components of annual ...
... supplies to register.

Step 3: Calculating and estimating the total value of supplies for the periods before and after VAT comes into effect.

Step 4: Confirming the date of registration, as per the results of Step 3.

Step 5: Applying for registration according to the procedures laid out by the tax authority of Oman.

What are the Benefits of Being VAT Registered?

The benefits of being VAT-registered, include the following:

● Claiming of VAT Refunds: Once you register for VAT, you are eligible to reclaim VAT on all goods and services bought by your business. The key lies in hitting the balance between what is charged, and what is received in VAT payments over the financial year. If you decide to invest in equipment, machinery or IT services the VAT amount that you may be able to reclaim will be quite high.

● VAT Registration Number: A business can benefit from displaying the VAT registration number on its website, documents, and stationary as it adds credibility to the goods and services provided, and makes the business seem more trustworthy and professional.

● Improve Business Image: For relatively new, small businesses, VAT registration poses an advantage as the business appears bigger than it actually is, because of the VAT threshold. It will also help in dealing with other, larger businesses that prefer valid VAT invoices.
Who Should Register for VAT in Oman?

If a person with a place of residence in Oman, that exceeds the annual revenue generated in the country, or is expected to do so, from any commercial, industrial or insignificant activity is required to register for VAT.

The point holds true, even if the mandatory registration threshold is exceeded. Regardless of income, every person who does not have a place of residence in the Sultanate of Oman, yet makes supplies in the country, is obligated to register for VAT.

VAT registration falls into two categories:

● Mandatory Registration: If a taxable person exceeds the annual threshold for mandatory registration, he is obligated to register.

● Voluntary Registration: If a taxable person exceeds the threshold for voluntary registration, he has the option to register.

To calculate the threshold, only taxable supplies are taken into account. In the case of voluntary registration, a person can take into account the taxable supplies and expenses that are subjected to Value Added Tax.

This means that, if a business hasn’t fully begun economic activity, but intends to in the future, but has incurred expenses that are subject to VAT in excess of the threshold, it may opt to register.

For the purpose of registering for VAT in Oman, the value of supplies to be calculated includes:

● Value of all taxable supplies, excluding capital asset supplies.
● Value of goods and services supplies, that are provided to a taxable person. This is subject to change to the reverse-charge mechanism.
● Value of intra-GCC goods and services supplies.

These do not include the exempt supplies.
How to Register for VAT in Oman
The process for applying and registering for VAT involves a simple, six-step process.

Step 1: The person who is required to register, must visit the tax authority’s website. (https://taxoman.gov.om/portal/ar/home)

Step 2: The electronic authentication service facilitates the log-in process.

Step 3: An electric form is displayed, which must be duly filled out.

Step 4: Ensure that the data provided for VAT registration is valid and up-to-date, and all the required documents have been attached.

Step 5: The application is ready to be submitted. A receipt from the tax authority will be provided, which must be carefully kept.

Step 6: The application will be reviewed by the tax authority, and on approval, will issue a VAT registration certificate. The certificate includes a unique registration number, the date of commencement of registration, important tax periods, and other details.
Points to Keep In Mind
Some important points to keep in mind while applying, registering, and receiving the registration certificate are as follows:

1. On receiving the registration certificate, it must be displayed in a prominent place, wherever the business is practiced, including but not limited to, all the branches and shops, the head office, etc.
2. An individual can and must obtain only one tax identification number, regardless of the number of branches and activities.
3. In all transactions performed, including tax invoices and other documents issued by the tax registrant, it is mandatory for the tax identification number, as per the registration certificate, to be mentioned.
4. Non-timely registration for VAT is subject to penalties as specified in the VAT law of Oman.
5. The guidelines also state that the Ministries or Government organizations that carry out activities in the Sultanate of Oman and have annual revenues that exceed the mandatory registration threshold, have to apply for and obtain VAT registration.

Conclusion

As per the guidelines laid out by the Tax Authority of Oman, VAT will be implemented from 16th April 2021, and online VAT registration commenced on 1st February 2021. Businesses will collect and account for tax on their respective supplies, and pay VAT for their purchases. Non-timely registration will attract penalties, as specified by the law.