GCC Indirect Tax Weekly Digest

Oman developments

OTA publishes VAT guides and Executive Decisions

In October 2020, the Sultanate of Oman announced the implementation of Value Added Tax (VAT) effective from 16 April 2021 and published its VAT Law through Royal Decree no. 121/2020. Following this announcement, the Oman Tax Authority (OTA) has initiated several measures including consultation with businesses and trade bodies on VAT and release of VAT guides, FAQs, and other useful documents to assist businesses and individuals in their VAT preparation process.

In continuation of these efforts, the OTA has recently issued the following Executive Decisions:

1. For setting the mandatory and voluntary registration threshold (Decision no. 1/2021)
2. Identifying food products which are subject to VAT at zero percent (Decision no. 2/2021)
3. For setting registration approach and due date for registration during the transitional period (Decision no. 3/2021

Additionally, the OTA has also released the following Arabic guides on their official portal: Registration for VAT; and How to get ready for VAT.

To help businesses understand the VAT guides and prepare for day one VAT compliance, Deloitte has created an analysis which provides an overview of the following:

• Zero-rated food items;
• Highlights from the VAT registration guide;
• Who needs to register for VAT?;
• Determination of taxable turnover;
• Staggered registration during the transitional period;
• Application for VAT registration; and
• Highlights from the ‘How to get ready for VAT’ guide.

We will share the link to our analysis shortly.

Oman virtual VAT academy: VAT impacts on the Real Estate industry

With the implementation of Value Added Tax (VAT) in Oman starting from 16 April 2021, companies operating in the Real Estate industry are expected to experience a significant impact on their business operations. The lead time on major projects and the VAT exemption on certain supplies of residential property are expected to create additional complexities to Real Estate businesses in Oman. Bearing in mind the penalty regime as per the new legislation, it is essential for businesses to understand the application of these rules in order to reduce the risk of non-compliance and also effectively manage their VAT position.

Deloitte’s Indirect Tax practice will therefore dedicate the sixth session of the Oman virtual VAT academy to the Real Estate industry. The session will be held on Tuesday 19 January 2021 at 2pm Oman time and will discuss how VAT interacts with companies within the Real Estate industry and what the likely issues businesses will face in preparation for entry into the VAT system. Below are some of the topics that will be discussed in more detail during the webinar:

• Overview of the key risks that businesses should keep in mind when undertaking their Oman VAT implementation;
• VAT registration and transition period rules;
• Treatment on exempt supplies, mixed use developments, construction and transactions beyond first sales;
• VAT implications on retention payments and advance payments and considerations of the impact on transitional contracts;
• VAT on continuous supplies/supplies with multiple milestone payments;
• Engineering, Procurement and Construction (EPC) contracts – issues experienced in other GCC VAT jurisdictions;
• Staff accommodation;      
• Input tax recovery on mixed use properties;
• Importance of supplier communication and contracts;
• Lessons learnt from experience in other GCC countries that implemented VAT.
  

This digest is for information purposes only and should not be construed as advice. It does not necessarily cover every aspect of the topics with which it deals. You should not act upon the contents of this alert without receiving formal advice on your particular circumstances.