More than 17,000 companies register for VAT in Oman

Muscat: More than 17,000 companies and institutions have registered for value added tax (VAT) since the beginning of the registration period, a senior official from the Tax Authority has said.

“During the two tax registration windows we have seen so far, the first from January 1, 2021 to March 31, 2021, and the second from April 1, 2021 to June 30, 2021, we have seen more than 17,000 companies and organisations register for VAT,” said the official, speaking exclusively to the Times of Oman.

“There are four VAT registration periods in the Sultanate. Companies whose annual income is above OMR1 million must register between January 1 and March 31 this year,” he said.

“The next window from April 1 to June 30, 2021 is for those whose annual income is between OMR1 million and half a million. These two periods have elapsed with the registration of more than 17,000 companies.”

The current period runs from July 1 to September 30, 2021, and is for those organisations that report an annual income of between OMR250,000 and OMR500,000, while the following period is from October 1 to December 31, 2021, and is for companies whose annual income is between OMR38,000 and 250,000.

VAT is a self-assessed tax, and therefore each person must constantly assess the necessity to register for the same. VAT registration is either mandatory or voluntary.

If the taxable person exceeds the mandatory limit, he is considered obligated to register, but if he exceeds the voluntary limit, he has the option to register.

The following must be taken into account when registering for VAT:

Taxable supplies must be accounted for. These are supplies that are subject to tax at the basic rate or zero rate minus the value of any supplies that form part of the company’s capital assets, intra-regional supplies of goods and services and the value of goods and services supplied to the taxable person in the Sultanate that are subject to the reverse charge mechanism.

Regarding the mandatory registration limit, every person residing in the Sultanate must assess the necessity of registration for tax purposes by conducting any of the following tests:

A retroactive test must be done if the total value of the supplies exceeds the mandatory registration threshold for value added tax, which is OMR 38,500 in the current month, as well as the previous eleven months.

Estimated tests are to be conducted if the total value of the supplies exceeds the mandatory registration threshold of OMR38,500 in the current month in addition to the next eleven months.

These tests must be carried out continuously on a monthly basis by an unregistered person who carries out an economic activity.

If the taxable person exceeds the mandatory limit in either case, he must apply for VAT registration. A non-GCC resident person who conducts any activity in Oman that can be taxed is required to register for tax purposes regardless of the total value of his sales.

For the purposes of voluntary registration, a person may register for VAT based on the value of supplies or expenses.

This may, for example, include a business that has not yet fully commenced economic activity and has incurred VAT taxable expenses exceeding the optional registration limit.

People can register voluntarily for taxation using a retrospective test if the total value of the supplies exceeds the voluntary registration threshold for VAT of OMR19,250 in the current month, in addition to the previous eleven months.

Similarly, an estimated test can be taken if the total value of expenses will exceed the voluntary registration limit during the current months and the previous 11 months.

Tax returns must be filled out and submitted periodically (i.e. on a quarterly basis) by the taxable person to the Tax Authority at the end of each tax period.

The tax return is a self-assessment of the tax due or recoverable from the authority, for the relevant tax period.

To determine the tax liability of the taxable person, he must deduct his input tax from any output tax and this results in a net tax that is either deductible or payable.

The tax return summarises the value of supplies, the output tax due, and the deductible input tax that the person in question has incurred during a taxation period. It shows the total taxes payable. The Tax

Authority has the right to impose fines if the tax return is not submitted on time in accordance with the provisions of the law and the executive regulations.

If the submission of the tax return results in a refund of the tax due to the taxable person, the Tax Authority may review and audit the tax return to verify the eligibility of the refund, and the tax will be refunded in accordance with procedures determined by the above organisation.