VAT Executive Regulation- Key Highlights

Yesterday, His Excellency Saud bin Nasser Al Shukaili, Head of the Tax Authority, issued the most awaited Executive Regulations for the Value Added Tax Law under Decision No. 53/2021. The regulations give lot of clarity on most of the significant areas which were under debate and discussion. Some of the key highlights of the regulations are as below:

Pre-Registration Input VAT Recovery

As per the article 73 of Executive Regulation, the taxable person can claim the input tax that he incurred for the supply of goods prior to the registration within the period not exceeding 3 years. 

As per the article 74 of Executive Regulation, the taxable person can claim the input tax that he incurred for the supply of services prior to the registration within the period not exceeding 6 months. 

In order to claim the input VAT, the taxable person must inform the Tax Authority within 30 days of registration. In case of claim of input VAT on goods stored in the stock valuing more than RO 50,000, the audited stock list is required to be submitted to Tax Authority for claim.

Deemed Supply - Free of Charge Gifts or Samples

As per the article 9 of Executive Regulations, it is clarified that if any commodity is given free of charge or as a sample under business promotions, it will be treated as deemed supply and VAT will apply, if its value is above RO 50 per person or for all the recipients above RO 1,000 in a year. That is, above these limit, gifts and freebies will be considered as deemed supply and supplier have to pay the VAT on that to the authorities.

Acting as Agent

Article 19 of Executive Regulation clarifies, if any company is acting as an agent on behalf of the principal, then the agent must notify the Tax Authority about such arrangement by submitting a power of attorney. Also, the agent is required to show the details of principal and beneficiary on all the documents (like invoices, contracts). The agent must also show disclaimer on the documents that he is performing all activities on behalf of principal. 

Exclusion from Residential Buildings

As per the article 83 of Executive Regulations, the residential real estate does not include the following; hotel apartments, any structure that is not fixed to ground, any place that offers a bed and breakfast and any tourist complex. These all buildings will attract VAT under rules of normal taxable supplies.

Exemptions for Travelers

As per the article 86 of Executive Regulation, the personal items and gifts accompanied by the traveler while travelling to the Sultanate are exempt if they are of no commercial quantity, value of each item is not more than RO 300, must not be a professional trader for the items in possession and item must be for personal use and living.

Simplified Tax Invoice Format

As per the article 147 of the Executive Regulation, the simplified tax invoice must show the followings;

• The phrase “Simplified Tax Invoice”,
• Date of issuance of invoice, date of supply, date of payment
• Full name, address, and tax identification number of the supplier.
• Description of goods and services
• Quantity of goods
• Total consideration excluding tax
• The applicable tax rates
• Discount
• Taxable Value
• Tax Due

Further as per the article 148 of Executive Regulation, the taxable person must submit the request to Tax Authority to use the simplified tax invoice format. The Tax Authority will give its decision within 15 days from the submission of request.

Reverse Charge Mechanism Invoice

As per the article 151 of Executive Regulation, in case of import of goods or services, the taxable person is liable to record the RCM. The taxable person must issue a self-Tax invoice with RCM VAT in his favor by the supplier who is resident outside the Sultanate and not registered with the Tax Authority.

It is quite evident from the Executive Regulations that Tax Authority will be vigilant on every action of the taxable person. Compliance is of key importance and is very much noticeable in each article of the Executive Regulations. Our next articles will be providing detailed insight on the key provisions of the VAT Executive Regulations.