On 12 October 2020, His Majesty, the Sultan of Oman, Sultan
Haitham bin Tariq bin Taimur, issued Royal Decree No.121/2020 in
relation to the implementation of VAT in Oman. Following the
introduction of VAT in the KSA, the UAE and Bahrain, Oman will be
the fourth GCC country to implement VAT in the region.
The VAT Law will set out the general principles for the application of VAT in Oman in line with the Unified GCC Agreement for Value Added Tax (VAT). The VAT Law is expected to be published in the Official Gazette on 18 October 2020 with an effective date for the introduction of VAT in April 2021. The VAT Executive Regulations will provide more details on the specific areas of the Law which are expected to be published by December 2020.
Meanwhile, the Oman Tax Authority has recently released ‘VAT information sheet' and ‘VAT basics for Individuals,' the documents that provide a general understanding of the Sultanate of Oman's Value Added Tax. These can be accessed at “VAT information sheet” and “VAT basics for Individuals”.
- The Government of Oman has approved the Oman VAT law, and it is expected that the final Decree VAT law would be released at the earliest for likely implementation with effect from 1 April 2020.
- Considering the limited time in hand, it would be imperative for all stakeholders having business in Oman or liable for paying VAT in Oman, to have a thorough understanding of upcoming VAT law and the implications arising therefrom.
- It would also be imperative for businesses to evaluate their readiness for implementing VAT and assess their preparedness from various aspects such as accounting impact, tax team structure, ERP and systems to be in place. The businesses need to revisit commercial clauses under ongoing contractual obligations with suppliers and buyers etc.
As the saying goes “A stitch in time saves nine” – it is essential for the businesses to evaluate their operations to ensure a smooth transition towards the VAT regime.
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