Sultanate of Oman is set to introduce Value Added Tax (‘VAT’) from April 2021. His Majesty, Sultan Haitham Bin Tariq Al Said has approved Royal Decree No. 121/2020 dated October 12, 2020 and accordingly, as per news report of Oman, VAT is set to be implemented in next six months once the Decree Law is published in the Official Gazette. With this, Oman will be the fourth GCC country to introduce VAT after United Arab Emirates, Kingdom of Saudi Arabia and Bahrain. Further, it will also join the league of 160 plus countries where VAT is already implemented.

Oman Government has uploaded certain basic information pertaining to VAT legislation on its website www.taxoman.gov.om . As per the said information, it is anticipated that the standard rate of VAT will be 5% as per the GCC treaty. Further, apart from standard rated VAT supplies, certain supplies may either be zero-rated or exempt from VAT such as supplies from – exports, financial services, certain health care services, certain food items etc.

Further, government has specified mandatory registration threshold limit of OMR 38,500 and voluntary registration threshold limit of OMR 19,250 for Omani businesses in order to make application for VAT registration.

With the above, it is imperative for Omani businesses to prepare holistically for this upcoming legislation since VAT will have an impact on every functional aspect of business. The possible VAT impact may also entail re-jig of the current processes so that they are compliant with VAT laws. It is therefore of utmost importance that businesses in Oman act promptly to perform a thorough impact assessment of the aforesaid soon to-be introduced indirect taxation law.

For companies based in the UAE and who have business interests in Oman, PKF UAE can assist such businesses in assessing what impact the newly introduced law in Oman can have on their business and what steps they must take to ensure that they are compliant with the VAT law in Oman and the UAE. Please feel free to contact PKF UAE at dubai@pkfuae.com