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VAT in Oman is expected to be introduced from 16th April, 2021 and it is all set to become the 4th GCC member country after UAE, Saudi and Bahrain to do so. The VAT rate in Oman is at 5% which is in line with the GCC framework. Starting 16th April,2021, a VAT rate of 5% will be levied on the supply of goods and services in the state of Oman.
While most of the supplies are expected to attract a standard rate of 5% VAT, the Oman Vat law is also provisioned to allow certain exceptions to levy 5% VAT. Certain type of notified supplies will be either exempted or zero-rated
Oman VAT Rate Structure
Rate of Tax
As mentioned above, the Oman VAT tax structure is broadly categorized into standard rate, zero-rated, and exempt rate.
All goods and services bought or sold or imported into the Sultanate of Oman are subject to VAT and a standard rate of 5% VAT will be levied on all such supplies. The businesses registered under Oman VAT are responsible to levy VAT @ 5% on such supplies, collect it from their customers and remit it to the government.
Zero-rated supplies are taxable supplies but are taxed at a 0% VAT. In other words, certain notified supplies, mostly exports, are treated as zero-rated meaning a nil rate of tax will be levied. Though they are taxed at 0% VAT, registered businesses can still claim input VAT on purchases and receive VAT refunds.
Exempt supplies are those that do not attract VAT. In simple words, a supplier of exempt supplies does not collect or charge VAT on its sales and also not allowed to claim the input VAT paid on its purchases.
The Oman VAT regulations deliver further guidance on various key areas and summarize the rules, policies, and prerequisites of various facets of the VAT Law, including:
The guidelines provide subtleties and explanation of the scope, conditions, limits, and degree of VAT zero-rating and exemption from VAT.
VAT zero-rating will apply to specific transactions within the following regions: supplies of and transactions connected with provisions of oil, oil subsidiaries, and gas; exports of good and service, supplies of specific food items; international goods and passenger transport; supplies of investment gold, silver, and platinum; supplies to customs duty suspension and special zones; and supplies of specific drugs and clinical gear.VAT exemption will apply to specific supplies including financial services, educational services, healthcare, and real estate relating to private properties.
The guidelines determine specific compliance prerequisites applicable to all VAT taxable people. A taxable individual who doesn't agree with the requirements could be subject to regulatory penalties recommended under the law and guidelines.
The rule require all taxable individuals to give a tax invoice for every taxable supply consisting deemed supplies and against receipt of advances. A complete tax invoice must contain:
The rules also give the option to allocate a simplified tax invoice with less information as compared to a full tax invoice.
VAT returns for all individual taxpayers will be based on the calendar quarters ending 31 March, 30 June, 30 September, and 31 December. The taxable individual will be needed to file a VAT return electronically through the online portal within 30 days from the end of the tax period in the form to be defined by the OTA.
The rules also set out the procedure for getting a VAT refund. The refund application must be raised in the form to be specified by the OTA, declaring the refund amount requested, the cause for the refund, and the tax period to which it connects. A taxable individual can claim a VAT refund wherein the VAT expended surpasses the VAT due, or in respect of VAT paid by:
It is to be note that the refund claims must be raised within 5 years from the end of the tax period in which the refund becomes due.
The VAT rule defines the records needed to be managed by a taxable individual:
The guidelines characterize the process for a taxable individual to object to a tax assessment, tax return adjustment, or enrollment decision made by the OTA. Objections should be submitted in Arabic.
Regulatory penalties of OMR 500 to OMR 5,000 are defined for specific offenses, including inability to:
For offenses including the accompanying theadministrative penalties range from OMR 1,000 to OMR 10,000:
A rate of 5% will be levied on the supply of goods and services in the state of Oman.
Read more on VAT rate in Oman
Yes. Oman implemented a new VAT system in April 2021 which attracts 5% VAT on all supplies of goods and services in the country.
Zero-rated supplies refer to the taxable supply on which VAT is charged at a zero rate. As the name suggests, on these supplies, VAT will be charged at 0%. The reason why zero-rated supplies are included under the taxable supplies bracket is to enable businesses to claim input Vat deduction on it. In simple words, you will be allowed to claim the VAT paid on the purchases though you will not be charging the VAT on your sale.
Read more on Zero-Rated supplies in Oman VAT
Read more on Oman VAT
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