Oman’s ambitious plan to introduce mandatory B2B e-invoicing by October 2024 has been postponed to 2025. Initially, the Sultanate of Oman’s Tax Authority outlined a voluntary phase beginning in April 2024, transitioning to a compulsory system by October. However, due to the absence of detailed design and system specifications, the implementation timeline has been revised.
Background and Current Status
The proposal to mandate e-invoicing was first announced in the Tax Authority’s update to VAT executive regulations at the end of 2022. This initiative aimed to streamline VAT compliance and enhance transparency through structured e-invoices. Despite these intentions, the lack of clear guidelines and technical specifications has led to the delay.
Based on the experiences of other countries, the seven-month period initially planned for the transition was insufficient to establish the necessary infrastructure. As a result, the mandatory launch is now expected to occur sometime in 2025.
Continuous Transaction Control Model
It remains unclear whether Oman will implement a pre-clearance Continuous Transaction Control (CTC) model. This model involves tax authorities receiving and validating invoices before they are recognized as VAT invoices, which could significantly enhance compliance and reduce fraud. However, details regarding the adoption of this model have not yet been disclosed.
Government Announcements and Industry Insights
In a formal Request for Information (RFI) tender, Oman’s Tax Authority confirmed its phased approach to e-invoicing. The RFI specified a voluntary period from April to September 2024, followed by mandatory e-invoicing from October 2024. This timeline has since been adjusted to accommodate the required preparatory work.
Regional Context
Oman introduced VAT in April 2021, becoming the fourth of the six Arab Gulf states to do so. Among these states, Saudi Arabia was the first to mandate e-invoicing, which it implemented at the end of 2021. The United Arab Emirates is expected to introduce e-invoicing by 2025, and other Gulf countries are also moving towards similar systems.
Benefits and Challenges
Mandatory e-invoicing offers numerous benefits, including improved tax compliance, reduced administrative burdens, and enhanced transparency. However, the transition presents challenges such as the need for businesses to invest in compatible e-invoicing software, train staff on new procedures, and ensure system interoperability with national and international standards.
Oman’s delay in launching mandatory B2B e-invoicing reflects the complexities involved in implementing a comprehensive digital tax system. While the postponement to 2025 provides additional time for preparation, it is crucial for businesses to stay informed about upcoming specifications and requirements from the Tax Authority. This regulatory shift underscores the importance of digital transformation in tax administration, setting a benchmark for other Gulf states.
