This blog was last updated on September 24, 2020
Oman is on its way to introduce VAT. After the approval of the State Council and the Shura Council the draft law was sent for final approval to Sultan Haitham Bin Tariq Al Said. If the draft law is approved, VAT is expected to be implemented in 2022.
Background
Gulf Cooperation Council (GCC) member states signed the Common VAT Framework Agreement in 2016. The VAT Framework Agreement envisages the six Gulf states (Saudi Arabia, United Arab Emirates, Bahrain, Kuwait, Oman and Qatar) would implement a unified VAT system. This would strengthen the GCC and continue work towards creating a unified regional economy through VAT integration.
Following this initiative, Saudi Arabia and the United Arab Emirates introduced VAT regimes in January 2018, while Bahrain followed suit in January 2019. The remaining three countries are still expected to implement the tax.
After the economic recession caused by COVID-19 and the drop in oil prices, Saudi Arabia has increased its VAT rate this year from 5% to 15% to generate more revenue. It is for these same reasons that Oman is taking steps to implement VAT.
VAT implementation progress
The draft law envisages a 5% VAT rate and it was first approved on 21 July 2020 by the Shura Council whose members were elected. As a secondary step in Omani judicial process, the draft law was sent to the State Council whose members were appointed by the Sultan. Currently, the draft law is waiting for the Sultan´s approval which is the final stage for VAT Law to be enacted. The draft law envisages VAT to be implemented in Oman in 2022 making it the fourth of the six Gulf states to introduce VAT as part of a 2016 VAT union agreement.
Take Action
To keep up to date with the changing VAT compliance landscape, download Trends: Continuous Global VAT Compliance and follow us on LinkedIn and Twitter to stay ahead of regulatory news and other updates.
