Few Benefits of Applying VAT in Oman

 

The application of Value Added Tax will be revolutionary for the country as it will not only benefit the growth of the economy but will also support the progress of the country as a whole. This would prove to be one of the critical steps that the state takes to expand its economy. Oman would turn out to be the fourth member of the Gulf Cooperation Council (GCC) to implement VAT in the single Unified VAT Agreement.

What is VAT?

VAT is a general consumption tax that is charged on dutiable goods and services that are bought and traded in Oman comprising the import of goods and services. It is taxed and collected at each phase of the supply chain right from the producer’s buying of raw materials to a seller’s sale of an end-product to a customer.

Omani businesses act as tax collectors for the Sultanate of Oman and are assigned with the duty of charging, collecting, and remitting the tax to the government. Companies need to register for VAT if they happen or expect to meet a yearly deliveries threshold.

Benefits of applying VAT in Oman?

Implementing VAT in Oman is said to have a progressive impact on its growth and global competitiveness and will help in building a defensible knowledge-based economy for upcoming generations. Below are some of the most vital benefits of practicing VAT in Oman:

Entitled to claim input VAT reduction

Input VAT is the tax abided by the taxable person in respect of the products or services provided to him or imported to conduct the activity. The tax unpaid and payable by any chargeable person for any tax period will be figured as the excess amount, of the overall value of output tax less than the complete value of input tax-deductible for that phase. The taxable person can claim the input tax deduction in 3 years from the date of an effective tax invoice.

Reliability and business status

As VAT registration number is to be exhibited on business documents, compulsory, such statements which offer trustworthiness and authorization of businesses. With an appropriate certification in place, businesses seem well recognized and firms would desire to do business that is trustworthy.

Audit trail

With the implementation of VAT, industries will need to ensure that they are maintaining the precise records for at least 5 years for submitting for FTA upon request. This not only confirms complete compliance but also gives the actual picture of the business’s economic circumstance.

Now the next plan for you would be to make your industry ready for VAT execution and can be done by selecting a business management software like TallyPrime Oman, which allows you to be VAT-ready quickly.

VAT in Oman

 

Oman will announce a value-added tax (VAT) system associated with the GCC VAT Framework with effect from April 2021. The standard rate of VAT will be 5%, making it one of the lowermost rates in the world. It is consistent with the GCC Unified Agreement with provisions for zero-rating and exceptions in the Oman VAT Law. Oman turns out to be the fourth Gulf Cooperation Council (GCC) member state to implement VAT, along with the UAE, Kingdom of Saudi Arabia, and Bahrain.

VAT execution in Oman

The online registration for VAT in Oman lives from 1st February 2021 until 15th March 2021 for taxable individuals with yearly supplies beyond or likely to exceed One million (OMR). The voluntary registration will also be accessible for taxable individuals with yearly supplies or expenses beyond or expected to exceed (19.250) OMR. The registration should be done through Oman’s official Tax Authority’s Online Portal.

In the implementation of Value Added Tax Law, one must register with the Tax Authority according to the given data:

Category	Registration Due Date	Effective Date of Registration
If the cost of annual goods surpasses or is likely to go beyond 1,000,000 Omani Rials	February 1 – March 15, 2021	April 16, 2021
If the cost of annual goods is between 500,000 and 1,000,000 Omani Rials	April 1-  May 31, 2021	July 1, 2021
If the yearly value of goods is between 250,000 and 499,999 Omani Rials	July 1 – August 31, 2021	October 1, 2021
If the yearly value of goods is between 38,500 and 249,999 Omani Rials	December 1 – February 28, 2022	April 1, 2022

Conclusion

With VAT being implemented throughout Oman on April 2021, industries have a limited period to get set for VAT. Industries or businesses in Oman should self-assess their VAT registration responsibility in Oman. Therefore, every business should keep VAT records of at least ten years from the end of the year to which they are associated for review. VAT returns must be filed electronically and are estimated that the VAT period will be a minimum of one month, and VAT expenses and returns must be filed within 30 days of the completion of the tax period.  VAT being on the approach of execution, it is very crucial for a business to become tax compliant. Business holders can be well-prepared with a complete view of their business transactions and VAT compliant with the help of TallyPrime VAT.

What is VAT and How Does it Work?

What is VAT: Value-added tax widely known as VAT is an indirect tax that is charged on the supply of goods and services. It has been executed in more than 160 nations and on April 1st, 2021 Oman will join the association of countries that have executed VAT. The VAT being a new system, businesses need to know the concept of VAT and how the structure works.

Understanding VAT

VAT is a universal consumption tax that is imposed on dutiable goods and services that are accepted and sold in Oman together with the import of goods and services. It is charged and collected at each phase of the supply chain right from the producer’s purchase of raw materials to a vendor’s sale of an end-product to a customer. As it is an indirect tax system, the listed businesses act as mediators to charge, accumulate and remit the tax to the authorities.

How does VAT System work?

The tax is charged on value addition in every phase of the supply chain. This is attained through the perception of input VAT deduction, which permits the industry to set off the VAT paid on procurements known as Input VAT along with Vat collected on the sales know as Output VAT. Let us understand the tenure of VAT Filing

• Businesses functioning with more than a certain threshold must file the VAT return once-a-month.
• Businesses functioning with less than a certain threshold must file the VAT return quarterly.

The Ministry of Finance in Oman may choose to outline a diverse tax filing period for particular businesses that fail to meet the terms. This may lead to fines or penalties.

Importance of collecting VAT for Oman Government

It benefits the government to produce adequate income for the smooth operations of public segments. It also assists in reducing the dependency on the oil capitals of the country. This is mainly an enhanced substitute to just trusting on natural reserves of the nation.

Does everyone pay VAT?

Certainly not, meanwhile, there are few exemptions declared by the government where individuals or companies are not necessary to pay VAT. In case, in real estate, the materials for commercial building are VAT applicable; but, the materials of residential building are VAT exempted. There is a distinct unit of “Zero Rated Supplies” which clarifies the whole lot about VAT exemptions.

Conclusion

TallyPrime manages your business by helping a transit to VAT regime and smooth functioning of your business. 

VAT Registration Guide in Oman

 

VAT in Oman is likely to get applied from April 2021. Oman would be the 4th of 6th Arab Gulf states to announce VAT as part of a 2016 VAT union agreement. The six states had been granted to implement a harmonized 5% regime. The mandatory Oman VAT registration onset is OMR 38,500. But, it is likely to apply for a volunteer registration above OMR 19,250. Non-resident industries will have to VAT register if they offer taxable goods, regardless of the registration threshold boundary. Find Below VAT Registration Guide in Oman.

Key highlights of VAT registration guide of Oman

The guide has explained that the below-mentioned steps must be followed in case any industry or individual needs to register for VAT.

• Decide whether the individual is obligated to register or not.
• Determine the constituents of the annual goods for the purposes of registration.
• Analyze or evaluate the total value of goods for the periods.
• Approving the registration date based on the result of computing or estimating the total value of goods.
• Apply for registration as per the processes that will be explained by the tax authority.

VAT Registration Timeline

After calculating the yearly goods, the person required to register must give an application for registration with the tax consultant within the dates stated by the Decision of the Head of the Tax Authority. The date of registration is the day on which the registration turns into effective, and the registered person must fulfil all necessities of the law as of this date, such as delivering tax invoices, keeping accounting histories, submitting tax statements, and other tax responsibilities.

How to apply for VAT registration?

Companies that meet the above conditions can start registering for VAT by logging in to the online VAT registration website provided by Oman tax experts. Steps for VAT registration are mentioned below:

Diagram

· The individual has to register must visit the tax authority’s portal i.e. https://taxoman.gov.om/portal/ar/home

· Then the individual has to log in with the electronic authentication provision

· Fill out the electronic form to register for VAT wisely

· Make sure the accuracy of the data and confirming that the application fulfills all the essential documentary requirements

· Submit the application and preserve the receipt of the application from the tax authority

· The tax expert reviews the registration application, and if accepted, it will issue a VAT registration license that comprises the registration number and other info such as the date of the registration beginning, tax periods, etc.

Being tax consent is exceptionally essential for business holders. TallyPrime confirms that the software is constantly prepared for any up-to-date statutory variations for the smooth working of your business.

Stay VAT Compliant with TallyPrime’s Amazing Capabilities

 

VAT is a universal consumption tax that is charged on taxable goods and services that are bought and sold in Oman together with the import of goods and services. It is charged and collected at each phase of the supply chain right from the company’s purchase of raw resources to a store’s sale of an end-product to a customer. Since it is a secondary tax system, the listed businesses act as mediators to charge, collect and remit the tax to the consultants.

Oman VAT registration released on February 1, 2021, for chargeable individuals with yearly supplies beyond or likely to exceed 1 million Omani Rial. Companies will need to keep VAT accounts for a minimum of ten years from the end of the year to which they are associated.

These histories will need to be made accessible for review at any time. The first step to make yourself for VAT compliance is by creating invoices following Oman VAT laws since the day of operation. It is expected that the VAT period will be a minimum of one month, and VAT expenses and returns must be filed within 30 days of the closure of the tax period. 

TallyPrime competencies for VAT compliant

With VAT execution just a few weeks away, companies are all set to welcome the new tax policy with open arms. From system outline to gaining compliance awareness, businessmen in Oman are prepping themselves to produce significant cash flow and complete tax costs. Using TallyPrime’s VAT-compliant billing, you can follow all the required tax laws.

Using TallyPrime, you can:

• Simplified configuration of the VAT rate
• Design tax rates based on their taxability
• Recording and creating precise invoices
• Create bills in Arabic/English or both
• Develop exception reports for discrepancy dealings
• Accomplish all kinds of VAT transactions in TallyPrime

What to consider in software for accurate VAT compliance?

Technology plays the most exciting, time-consuming, and complex role in the VAT implementation journey. Therefore, it is of major importance that your ERP system supports you systematize VAT calculation. It includes the creation of several types of invoices with many items, multiple tax types, and multiple currencies, tax reports, and the generation of tax invoices. The customized system information must be developed in advance to avoid VAT return filing and audit difficulties. Therefore, using an automated system for VAT compliance will increase your business efficiency. Check our website for Tally Prime VAT today that manages VAT implementation, guaranteeing VAT compliance and business stability.

VAT Invoice in Oman

 

Invoices function as an important purpose for both, the business directing the invoice and the client accepting it. For small companies, an invoice supports expedite the expense by providing customers a statement of the payment that is unpaid. Not just that, a bill also aids you to track your company’s sales and income and retain your books of accounts updated. With VAT in Oman, the invoice issuance grabbed more importance. This is because the VAT law orders all the industries registered for VAT to offer an invoice on making a taxable supply.

What is a tax invoice?

Tax Invoice in Oman just refers to a printed or electronic document which the payable person must issue, and it must comprise of particulars of supply and all other details in accordance with the requirements of law. Businesses that are listed under VAT must now issue a tax invoice for the resource of taxable goods and services. The VAT and guidelines commend the necessities of Tax invoices as it is one of the compliance responsibilities that business must be followed.

When should you issue a tax invoice?

Under Oman VAT, on selling a taxable source of goods and services, a registered industry must issue a tax invoice. The tax invoice should be issued when:

• Supplying of goods or services
• estimated supply
• reception in full or part beforehand the date of supply

Tax invoices may perhaps be issued by third parties on behalf of the taxable person only on the authority’s consent is attained. The guidelines will define the circumstances and instructions to issue tax invoices, their kinds, their substitutes, alterations and the data it must comprise, and cases that are exempted from dispensing a tax invoice.

Components of tax invoice

A thorough tax invoice must be issued for all taxable goods showing, among others, the sum of VAT unpaid and the net value for each line element.

A tax invoice is required to include:

• Mention to “tax invoice”
• Trader name, address, and VAT ID number (VATIN)
• Client name and address
• Serial invoice number
• Date of invoice issued
• Date of supply
• Report and amount of goods or services
• Chargeable amount and unit price in OMR
• Tax percentage
• Amount of VAT charged in OMR

Format of a Tax invoice (Picture)

Currency in which VAT should be issued

The tax invoice is to be issued in Omani Rials or in a foreign currency, but the tax value is to be considered in Omani Rial for each the average purchase and sale price of the currency issued by the Central Bank of Oman.

TallyPrime will uphold regular accounting records in a timely manner that helps transit to the VAT regime.