VALUE ADDED TAX (VAT)

Introduction of VAT in Oman

Following the announcement of Royal Decree No. 121/2020 on 18th October 2020, for issuance of Value Added Tax (VAT) Law, and for it to be effective from 16 April 2021.

VAT charges will be implemented on our products and services and applied across all our general terms and conditions as well as our schedule of charges.

We will be issuing valid tax invoices charging VAT at the applicable rate on all domestic supplies for our customers from 16 April 2021 in order to be VAT compliant.

VAT is a consumption tax which is charged at the standard rate on all goods and services except those which are exempted. VAT will be introduced at the standard rate of 5%. Our systems will be updated to ensure that it is charged, and collected in accordance with the VAT legislation.

As for our suppliers, Oman VAT can only be levied and charged by businesses that are registered for VAT in Oman. VAT registration will be mandatory for businesses, in terms of the following timelines:

S.No.ParticularsRegistration timelines
1.For a person whose annual value of taxable supplies exceeds or is expected to exceed 1,000,000 OMR1 Feb 2021 - 15 Mar 2021
2.For a person whose annual value of taxable supplies is or expected to be in the range of 500,000 to 1,000,000 OMR1 Apr 2021 - 31 May 2021
3.For a person whose annual value of taxable supplies is or expected to be in the range of 250,000 to 499,999 OMR1 Jul 2021 - 31 Aug 2021
4.For a person whose annual value of taxable supplies is or expected to be in the range of 38,500 to 249,999 OMR1 Dec 2021 - 28 Feb 2022

Period to be considered for actual annual supplies: 1 Nov 2019 to 31 Oct 2020. Period to be considered for expected annual supplies: 1 Oct 2020 to 30 Sep 2021

Alternatively, businesses can opt to voluntarily register for VAT if it made or anticipates making taxable supplies or expenses exceeding the voluntary registration threshold of OMR 19,250 for the above mentioned periods.

NBO's VAT registration numbers for your records / administration, VAT registration number: OM1100018164.


Frequently Asked Questions (General)

What is VAT?

VAT is an indirect tax applied upon the consumption of most goods and services. VAT is levied by VAT-registered businesses which make supplies of goods and services in the course or furtherance of their business. VAT will also apply on the importation of goods and services.

 

Will VAT cover all products and services?

VAT will apply to most transactions of goods and services unless specifically exempted or excepted by law. VAT is ultimately incurred and paid by the end consumer. Although VAT will apply to most goods and services there are some exceptions: this includes basic food items, exports of goods and international services which are zero rated supplies. Furthermore, there are certain financial services that are exempt from VAT.

 

What are the types of supplies for VAT purposes?

  1. Taxable supplies:
    • Standard rated supplies – subject to VAT at 5%; and
    • Zero-rated supplies – subject to VAT at 0%.
    • Exempt supplies – not subject to VAT.

       

      When will VAT go into effect?

      VAT will be implemented in the Oman, effective 16 April 2021 at the standard rate of 5%.

       

      What are the expected VAT treatments in the banking sector?

      Oman VAT legislation exempts financial services from VAT. However, where an explicit income is earned by a bank, where payment is received as a fee, commission or commercial deduction, VAT shall be payable on such payments.

      Note that VAT is a transaction-based tax and accordingly, the banking entities will not be fully exempted from VAT. Only certain specified financial services transactions will be exempt from VAT.

       

      Does Islamic Banking Activities Also Subject To VAT?

      Yes, Islamic banking services and commercial banking services will be subject to VAT

       

      Is National Bank of Oman required to charge VAT?

      Yes. National Bank of Oman being registered for VAT in Oman is required to charge and collect VAT on its taxable supplies in Oman. Hence, VAT is applied on Fees and Commission charged by the Bank.

       

      What is National Bank of Oman's Tax Identification Number?

      The bank's Tax identification number is OM1100018164

       

      Will VAT Be Charged to Individuals?

      Yes. VAT is applicable to individuals and corporates

       

      How will VAT be charged if I make the same type of transaction several times?

      VAT is a transaction-based tax. Accordingly, VAT (if applicable) will be levied on each instance of a transaction i.e. if monthly bank fees are levied, then VAT will be levied on each monthly fee charged by the bank.

       

      How is VAT calculated in respect of charges to a Foreign Currency Account?

      If the taxable supply charged to the foreign currency account is denominated in a currency other than Omani Rials, VAT will be calculated and imposed on the foreign currency value of the service charge.

      For purposes of the bank statements (tax invoice) issued, the VAT amount will be converted into the Omani Rials at prevailing rates on the date of supply.

       

      Will my Loans / Mortgage / Auto Financing/ Credit card payments be subject to VAT?

      VAT will not be levied on the principal loan amount and interest charged in relation to the loan amount.

      However, fees or service charges will likely be subject to VAT at the standard rate, unless they specifically qualify for zero rating. Example of these fees would include administration fees, loan processing fees, documentation fees and handling charges.

       

      Will there be VAT charged on withdrawals made through an ATM?

      VAT will not be charged on the withdrawal amount. However, any withdrawal fees charged will be subject to VAT at the standard rate (5%).

       

      What is the treatment of remittance fee?

      On the basis that the supply of remittance services is made in the Oman and it is made to customers who are resident in the Oman (i.e., funds are transferred from an applicant belonging in Oman to a beneficiary belonging in Oman), the interbank fee will be subject to VAT at standard rate of 5%.

      FAQs for Corporate Banking Customers

      I am a Corporate Customer. How will VAT affect me?

      In line with Government mandate, starting 16 April 2021, VAT at 5% will be added to all supplies when you conduct any transaction that attracts VAT. However, if you are registered for VAT then you can claim the VAT paid on your expenses.

       

      I am a Corporate Customer. Can I claim VAT on my banking expenses?

      If you are an Oman VAT-registered business, you will be able claim the VAT incurred in respect of banking expenses, subject to certain conditions being met:
  • You are in possession of a valid tax invoice.
  • You paid the consideration amount; and
  • the VAT incurred is in respect of the making of taxable supplies.

     

    How Do I Get A VAT Registration Number?

    VAT Registration Number can be obtained from Tax Authority provided they exceed the turnover threshold given by Tax Authority

     

    I am a Corporate Customer. How will the bank know that our business is VAT registered or not?

    The customers should provide their VATIN numbers to the bank along with their registered name, address, and a copy of their VAT registration certificate. Please contact your Relationship Manager to submit the VAT Registration Form.

     

    Why I Am Not Seeing VAT in My Bank Statement?

    Bank statement will show charges inclusive of VAT. Any fees and charges debited from the account (including VAT amount levied) will be reflected on the tax invoice issued by the Bank to you. Such invoice may be used for claiming back the VAT that you have paid to the Bank, as input.

     

    Where can I obtain a tax invoice to claim back the VAT that I have paid to the bank?

    At the end of each month, tax invoice will be sent to the email address of the customer registered with the Bank. Alternatively, Customers can also download their tax invoices through Corporate Internet Banking portal for a period of up to previous 12 months.

     

    General Transitional Rules

    Will there be VAT charged on supplies with contracts and agreements entered prior to 16 April 2021, but straddles 16 April 2021?

    E.g., for Safe Deposit Box charges, charged on 1st January 2021 for the entire year

    In the event a supply straddles the time between pre and post VAT, the proportion of the supply that falls under the VAT effective period will attract VAT. For example - if a customer has a safe deposit box, which is effective 1 January 2021 to 31 December 2021, and the fee is OMR 120 p.a. VAT will apply for the period between 16 April 2021 to 31 December 2021, and VAT should be calculated on OMR 85 (i.e. 120* 8.5/12).

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