Oman VAT Guide for Capital Asset Adjustments

Oman VAT Guide for Capital Asset Adjustments

Oman VAT Guide for Capital Asset Adjustments

In May 2022. the Oman Tax Authority (“OTA”) published the VAT Guide for the purchase and use of Capital Assets.

  • Capital Assets
    • Tangible and intangible assets
    • Intended for long term use
    • Used as business instrument or investment vehicle
    • Not held for resale during normal economic activity
  • Input Tax Deduction on Initial Acquisition
    • VAT incurred by a Taxable Person upon acquisition of a Capital Asset (by purchase, import or construction) may be deducted as Input Tax at the time it is incurred. If used for both taxable and exempt supplies, use proportional deduction.
    • Default method
      • based on ratio of taxable supplies to total supplies
  • Change in use of Capital Asset
  • Alternative method
    • based on actual use, subject to approval of the OTA
  • Arises if the use of the asset changes from making taxable supplies to non-taxable supplies, or vice versa, or if the taxable use percentage changes.
  • Adjustment period is 10 years for long-term capital assets, and 5 years for all other capital assets
  • Other GCC VAT-Implementing Countries: UAE, KSA and Bahrain
    • Proportional deduction of input tax on capital assets is applied across other VAT-implementing GCC countries. It also follows the same adjustment period, except for KSA which applies 10 years for real estate and 6 years for tangible/intangible assets.
  • How can Crowe help?
  • Assess the propriety of tax treatment on input tax related to capital assets
  • Assist in the application of default or alternative method for input tax recovery.
  • Assist in the preparation of VAT returns, properly reporting the input tax related to capital assets, and reflecting the applicable adjustments, if any

Contact Us

Markus Susilo
Markus Susilo
Partner- Payroll and Indirect Tax
Michel Ruitenberg
  Partner DIFC - Indirect Taxes