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On 4 January 2021, the Oman Tax Authority (OTA) issued Decision No. 3/2021 announcing the phasing of mandatory value added tax (VAT) registrations in Oman. Spread over four phases and one year, the mandatory VAT registration schedule is as follows.  

While businesses with annual supplies exceeding OMR 1 million are expected to have obtained mandatory VAT registration effective 16 April 2021, the second phase of mandatory VAT registrations is currently underway. In this phase, businesses with annual supplies between OMR 1 million to OMR 500,000 must register on or before 31 May 2021 for VAT registrations that would be effective from 1 July 2021.  

Taxable persons eligible for voluntary VAT registration or group registration can apply for registration at any time.    

Non-resident taxable persons required to register must apply for registration within the timelines specified in Article 111 of Oman VAT Executive Regulations, that requires:

1. A person who does not have a place of residence in Oman and has a place of residence in any of the GCC Implementing States, to apply for registration within (30) thirty days of the date of qualifying for mandatory VAT registration.
2. A person who does not have a place of residence in Oman or in any of the GCC Implementing States, to apply for registration at least (20) days before the beginning of the month in which the first supply takes place.   

Failure to obtain registration within the specified time could have penal consequences. 

The registration process and forms issued by the OTA for the first phase of mandatory VAT registrations remain the same for the subsequent phases.

To access KPMG’s tax alert on the registration process and forms issued by the OTA please click here.  

Before applying for a registration, it is extremely important for businesses to fully understand their obligations and evaluate, among other matters, the following:

1. Which supplies should be considered in determining the value of annual supplies?
2. Over which period should supplies be considered – historic, prospective or both?
3. Which registration process should be adopted – resident with commercial registration, resident without commercial registration or non-resident business without commercial registration?
4. Who will act as the responsible person for the applicant?
5. In case of non-resident businesses, is the supplier obliged to pay VAT in Oman and therefore responsible for VAT registration? Or can the recipient in Oman pay VAT and relieve the supplier from registering for VAT in Oman?
6. Whether registering a non-resident business would create a permanent establishment exposure from a corporate tax perspective?
7. Whether a permanent establishment from a corporate tax perspective is required to register for Oman VAT purposes?

Persons with annual supplies between OMR 1 million to OMR 500,000 who have not yet registered have a short window up to 31 May 2021 to apply for VAT registration. Based on our experience with VAT registrations in the first phase, businesses should prepare for and consider registering as soon as possible to avoid potential difficulties in gathering the necessary documentation and bottlenecks with last minute registrations. 

KPMG has a dedicated team of experienced VAT implementation specialists and advisors based in Oman supported by a larger, experienced regional team. If you need any assistance with VAT related matters in Oman, please reach out to your tax advisors at KPMG or the contacts mentioned below.