Small firms get more time to become VAT compliant in Oman

KEY FEATURE: Guidance issued by the Tax Authority on Wednesday envisions a one-year timeframe, spanning the April 2021 to April 2022 period, for the phased implementation of VAT based on the annual turnover of tax-eligible businesses and organisations Small and micro-businesses in the Sultanate with an annual turnover that brings them within the ambit of the Value Added Tax (VAT) regime have until April 1, 2022 to get themselves effectively registered for the new levy, which is set to come into force on April 16, 2021. In relaxing the registration timelines for small firms, the Tax Authority of the Sultanate has taken into consideration the challenges — financial, administrative and logistical — that VAT preparations may pose to this increasingly vital segment of the Omani economy, say experts. Guidance issued by the Tax Authority on Wednesday envisions a one-year timeframe, spanning the April 2021 to April 2022 period, for the phased implementation of VAT based on the annual turnover of tax-eligible businesses. “The phased approach is good news for smaller and domestic indigenous Omani businesses, as it will provide them the time they need to get familiar with the Oman VAT legislation, understand how VAT will impact their business and sufficiently prepare to be compliant,” said multinational law firm Pinsent Masons in an advisory to customers. The staggered timeline for VAT registration — an approach adopted by other member countries of the GCC as well — will see larger businesses and organisations lining up first to get registered, followed by mid-sized firms, with smaller businesses coming up last. Divided into four distinct groups based on their total turnover, ‘Category A’ firms with total turnover of RO 1 million and above are required to apply for VAT registration between February 1 and March 15, 2021. Their certification for VAT becomes effective on April 16, 2021. A two-months-long timeframe, spanning the April 1 to May 31, 2021 period, is specified for ‘Category B’ firms with a total turnover ranging from RO 500,000 to less than RO 1 million. The certification date for this category is July 1, 2021. Next in the line-up for registration are ‘Category C’ firms with turnover of between RO 250,000 and less than RO 500,000. They can register from July 1 to August 31, 2021, with certification becoming effective on October 1, 2021. Rounding off the list are ‘Category D’ businesses — essentially small and micro ventures with turnovers of between RO 38,500 and less than RO 250,000. They are required to register between December 1, 2021 and February 28, 2022, with certification becoming effective on April 1, 2022. Explaining the significance of the effective date of registration, multinational professional services firm PwC says it is “the date on which the registration becomes effective, and the registered person must comply with all provisions of the law as of this date, such as issuing tax invoices, keeping accounting records, submitting tax declarations and other tax obligations”. Significantly, any tax-eligible person with turnover of between RO 19,250 and RO 38,500 may also register voluntarily for VAT, notes PwC in a similar advisory. Such voluntary registrations open from February 1, 2021, according to the firm. Voluntary registrations apply to: (i) Any person who has a place of residence in the Sultanate that exceeds or is expected to exceed the annual revenues generated by him from a commercial, industrial, professional or other activity the voluntary registration limit (RO 19,250), and (ii) Any person who has a residence in the Sultanate that exceeds or is expected to exceed his annual expenses that he spends in the Sultanate related to a commercial, industrial, professional or other activity, voluntary registration limit (RO 19,250), PwC stated. CONRAD PRABHU @conradprabhu