“Responsible Person” for VAT in Oman – a New Concept
The Value Added Tax (VAT) law in Oman was published in the official gazette on 18th October 2020 after the release of Royal Decree 121/202. Oman will be the fourth GCC state to implement VAT since the signing of the GCC VAT Agreement at the end of 2016. The date of implementation of VAT in Oman is within 180 days from the date of publication of the Law in the Official Gazette, i.e., 16 April 2021. The law provides for a standard rate of VAT of 5%, with certain supplies being zero-rated or exempt from VAT.
Compared to the VAT law of other GCC nations, VAT in Oman has adopted different or additional treatments to certain concepts. One such concept is the Responsible Person. This article would discuss the term Responsible person, their duties, powers, responsibilities and penalties for noncompliance.
Who is a “Responsible Person” for VAT in Oman?
The Oman VAT law states that it is mandatory to appoint a responsible person for VAT in Oman. There must be a responsible person assigned by every taxable person. A Responsible Person is a person assigned with acting on his behalf in executing the responsibilities imposed upon him by virtue of the provisions of this Law. The Oman VAT law has defined who would be a responsible person in different types of entities under Article 2.
The person acting as the responsible person in a different kind of entity are as follows:
- Sole proprietorship: The owner or the responsible manager.
- One Person Company: The owner or the responsible manager.
- Partnership or limited partnership: The partner in the company, or its manager.
- Joint Venture Company: the manager appointed by the partners in charge of the management of the company, whether he is a partner or not.
- Joint Stock Company: The Chairman of the Board of Directors or the director authorized by the Board of Directors.
- Limited Liability Company: The manager of the company, or the person responsible for the management of the company.
- Regarding a Fixed establishment: The owner or manager or the agent of the owner of the fixed establishment in case it conducts its activities in the Sultanate through an agent.
- Concerning any person who does not have a place of residence in the Sultanate: Any person who has a residence in the Sultanate which is appointed by that person. And it is permissible by a decision of the Tax authority to specify the qualifications that must be met by the responsible person.
In cases of imposing receivership, liquidation or declaration of bankruptcy of the company: The receiver, liquidator or Director of bankruptcy, depending on the circumstances is the Responsible Person.
Who has the right to appoint a “responsible person” for VAT in Oman?
Article (3) of the Oman VAT law has explained the right of every taxable person to appoint the Responsible Person. It is the duty of every taxable person to identify and appoint a person as the responsible person and it should also be notified to the Tax authority in accordance with the procedure determined by the law.
It is also stated that if the Taxable Person fails to appoint a responsible person, the tax authority may do so on the taxpayers' behalf and the same is notified by the tax authority.
What is Period of Absence For A “Responsible Person”?
Unlike other effective VAT laws in other GCC nations, the period of absence of a responsible person for VAT in Oman is a new concept implemented under the Oman VAT law.
As per the Article 4 of the Oman VAT law, the responsible person must not remain outside the Sultanate for a period of more than (90) days during the tax year (i.e., calendar year). This could be done only with the permission of the tax authority.
The taxable person must obtain prior approval of the tax authority to appoint another responsible person to replace him during the period of his absence in case the responsible person has to stay outside the Sultanate for more than 90 days.
What are the duties of a “Responsible Person” for VAT in Oman?
VAT in Oman has stated the duties of the responsible person in Article 76. One of the main responsibilities is during the event of an audit, the tax authority may request the physical presence of the responsible person within a given timeline. Hence, it is the responsibility of the responsible person to be present at the time and place stated in the competent notification to discuss taxable transactions or supplies, or anything in relation to the tax due, in accordance with this Law.
The duties of the responsible person also include submission of the tax return for every tax period without delay. Default in timely submission may attract penalty to the responsible person which is discussed later in this article.
Penalties for Non-Compliance By The Responsible Person for VAT in Oman
Article 100 of the Oman VAT law has listed out penalties for non-compliance, which would include both with fine and imprisonment. The following instances would attract the penalty with imprisonment for a period of not less than (2) two months and not exceeding (1) one year or with a fine of not less than (1,000) one thousand Omani Rials and not exceeding (10,000) ten thousand Omani Rials, or either one.
- Deliberately refraining by the Taxable Person to nominate the Responsible Person.
- Deliberately refraining by the Taxable Person to notify the Authority and obtain its approval to appoint another Responsible Person during his period of absence of more than (90) ninety days.
- Deliberately refraining by the Responsible Person to attend to the request of the Authority.
- Deliberately refraining by the Responsible Person from submission of the tax return for any Tax Period
- Having only 4 months left for its implementation, it is therefore imperative that businesses be prepared and be aware of the concepts, terminology, compliances to avoid extra burden of penalties. In respect of selecting responsible person, it would be wise for every taxable person to choose someone as a responsible person who will be always available for any hearing and who does not have the requirement to visit outside the Sultanate for more than 90 days. Practically, non-resident businesses are likely to face difficulties with this requirement, and it is advisable that they should chart plans in place as soon as possible.
With our abundant experience in implementing VAT across a wide array of clientele in UAE, Bahrain and KSA, we can support you in developing a sustainable tax system in compliance with the regulations.
Our services include:
• VAT Registration Service in Oman
• VAT Implementation Service in Oman
For Consultation VAT in Oman
CA. Manu Palerichal I Partner & CEO
Mob: +971 50 2828727
Email: manu@emriatesca.com
