How to Determine VAT Payment in Oman


Yarab A | Updated on: November 15, 2021

The businesses registered under VAT act as an agent responsible for collecting VAT and remit to the government. On every taxable supply, businesses should levy 5% VAT and similarly, when they purchase taxable goods or services from their supplier, they must pay VAT.

While it is evident that registered businesses need to remit the VAT amount to the government, but how much is the question? Should one pay the entire amount of VAT collected on sales? Can one adjust the VAT paid on purchases?

Before we detail the method to determine the VAT payable, it’s important to understand ‘Output VAT’ and ‘Input VAT’. These two are essential components to determine the VAT payment in Oman.

Output VAT

Input VAT

The output VAT is the amount that you collect on making taxable sales

Input VAT is the amount paid by you for making the taxable purchase from your supplier

The input VAT amount paid by you will be paid to the government by your supplier. As a result, the government gives the benefit of input VAT to the buyer and allows him to adjust it with output VAT and pay the remaining. This concept is called input VAT deduction.

However, the input VAT deduction can be claimed by businesses only on the purchases used to make taxable supplies and, importantly, those supplies that meet the guidelines prescribed in Oman VAT law and regulations. Certain supplies are blocked for input VAT recovery, meaning you cannot claim input deduction on those supplies.

Expenses on which Input VAT Deduction is Blocked Reverse Charge Mechanism in Oman VAT

Now let’s discuss the method to determine VAT payment in Oman

How to determine VAT payment in Oman

To arrive at VAT payment, you need to use a simple formula. All you need to do is calculate your total output VAT collected during the tax period and the total input VAT that you are eligible to recover. After you have determined the output VAT and input VAT, apply the below formula:

 VAT Payment = Output VAT – (minus) Input VAT

Example of VAT payment

Below is the output and input of Ali Electronics

Output VAT

Input VAT

OMR 150,000

OMR 100,000


The VAT payment of Ali Electronics is determined after adjusting the output VAT with input VAT as shown below:

Output VAT OMR 150,000 – (Minus) Input VAT OMR 100,000 = 50,000

The VAT payable by Ali Electronics is OMR 50,000 that needs to be paid on filing VAT returns. While this looks easy to determine, what happens if input VAT is more than output VAT?

In some situations, your input VAT might be higher than the output VAT. In such a situation, the excess input VAT will result in VAT refundable. You can carry forward it the next return period and adjust it against your future VAT liabilities. Also, if the amount is greater than OMR 100, you can apply for a refund.

How can TallyPrime help?

Remittance of the right amount of VAT is one of the critical responsibilities of the business. Failing to which, hefty fines and penalties will be levied. The accuracy of determining the VAT payment depends upon how accurate the output VAT and input VAT values are. Here is how TallyPrime can help you.

How to determine VAT payment in Oman using TallyPrime

TallyPrime, a business management software with a complete VAT solution, automatically determines the output VAT and input VAT, based on the transaction you record. The best part is that you can know the VAT payable for a given period at a click of a button. Using, TallyPrime, you can generate tax invoices, record different types of supplies and auto-generate returns in a few seconds.

Read more on Oman VAT:

Oman VATVAT Invoice in OmanBest VAT Software in Oman,  Exempt Supplies in Oman VATHow to Calculate VAT in Oman, What is VAT and How does it workWhat are the Benefits of Applying VAT in Oman

VAT Rate

VAT Rate in OmanZero-Rated supplies in Oman VATFood Items Subject to Zero-rate VAT in Oman

VAT Registration

VAT Registration Guide in Oman, Who Should Register Under Oman VATBusiness Benefits of Voluntary VAT Registration

VAT Return

VAT Return in OmanOman VAT Return FormatFAQs on Oman VAT ReturnHow to File Oman VAT Return


Compliance solutions right from invoicing to filing returns are just a click away