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Tax Authority issues 3 VAT-related decisions

6 Jan 2021

Tax Authority on Wednesday issued three executive decisions pertaining to the implementation of the Value Added Tax (VAT), which will come into effect on April 16.

The first decision determines the minimum volume of supplies  (sales), which would require a taxpayer to compulsorily register with the Tax Authority. The second one relates to deadlines for registration to the Tax Authority while the third one lists the foodstuff exempted from the VAT (zero VAT payment).

As per the first decision, registering with the Tax Authority becomes compulsory if a taxpayer’s annual supplies stand at RO38,500 or more or are expected to reach this ceiling.

The decision sets the ceiling of ‘voluntary’ registration with the Tax Authority at RO19,250 and states that, accordingly, a taxpayer may apply for voluntary registration if the applicant’s annual supplies stand at, cross or expected to go beyond the value of RO19,250.

Determining ceilings for compulsory and optional registration comes within the context of the provisions of the GCC Unified VAT Agreement, which the sultanate signed in November 2016.

The second decision fixes deadlines for taxpayers’ registration to the VAT at the Tax Authority. The decision was made taking into account a certain level of progression in taxpayers registering with the Tax Authority, depending on the volume of their annual supplies. ‘The aim is to grant small and medium enterprises sufficient time to prepare and adjust their systems and their mechanisms of filing and billing to meet the requirements of the Tax Law,’ it said.

The decision sets the ‘Deadline of Registration’ – the date on which a taxpayer will be required to implement the provisions of the VAT Law – according to the volume of the taxpayer’s supplies. If the value of annual supplies of a taxpayer crosses or is expected to cross RO1mn, one has to register with the Tax Authority between February 1 and March 15 this year. Accordingly, the VAT for this segment (RO1mn-worth supplies) becomes applicable from April 16.

As for taxpayers whose supplies cross or are expected to cross the RO500,000 mark, their registration will be done in April and must be complete by July 1. The deadlines for lower segments follow a similar slope (per volume of supplies) till the minimum level of RO38,500-worth of supplies. The decision grants taxpayers a right to register voluntarily with the Tax Authority with effect from February 1 in case the value of their supplies crosses or is expected to cross RO19,250.

The third decision specifies the type of foodstuff exempted from the VAT. The list consists of 94 items under the customs tariff system to be exempted. These include meat, fish, poultry, dairy products, fresh eggs, vegetables, fruits, coffee, tea, cardamom, cereals and grains, olive oil, sugar, children’s foods, bread, bottled water and table salt. 

 

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