NAQIXVAT in Oman and Bahrain: the basics for small businesses
Oman and Bahrain both run VAT under the GCC framework, with their own rates, thresholds and return processes. For a small business the daily work is similar in both: issue correct tax invoices, keep input tax recoverable, and make the return easy to prepare from the books.
The two regimes at a glance
Both countries introduced VAT under the common GCC VAT agreement, and both have their own law and tax authority:
- Oman introduced VAT in April 2021 at a standard rate of 5%, administered by the Oman Tax Authority.
- Bahrain introduced VAT in January 2019 and raised the standard rate to 10% from January 2022. It is administered by the National Bureau for Revenue (NBR).
Each country sets mandatory and voluntary registration thresholds based on the value of taxable supplies, and assigns registered businesses a tax period. Rates, thresholds, zero-rated and exempt categories and filing deadlines differ between the two, and change from time to time. Confirm the current position for your business with your tax adviser or the relevant authority before you register or change how you invoice.
Standard, zero-rated, exempt and out of scope
Every sale needs one of four treatments, and the difference matters for your input tax:
- Standard-rated supplies carry VAT at the standard rate.
- Zero-rated supplies carry VAT at 0%, but the input tax on related costs generally stays recoverable. Exports and certain basic food items, medicines and medical equipment are typical examples in GCC laws.
- Exempt supplies carry no VAT, and the input tax on related costs is generally not recoverable. Certain financial services and residential property are typical examples.
- Out of scope transactions are outside VAT altogether.
The lists in each country's law are specific, and an item zero-rated in one GCC country may be standard-rated in another. Build your item list with your adviser rather than copying another country's.
What a tax invoice generally needs
Tax invoice requirements are set by each country's regulations, but the core content is similar. A full tax invoice generally includes:
- the words "tax invoice", a sequential number and the date of issue;
- your name, address and tax registration number;
- the customer's name and address, and their tax registration number for business customers where required;
- a description, quantity and price of each item;
- the VAT rate and VAT amount, and the total including VAT;
- for an invoice in a foreign currency, the VAT amount in the local currency.
Simplified invoices may be allowed for smaller retail sales, and Arabic may be required on some documents. Check the exact requirements in your country, and correct a mistake with a credit note that references the original invoice rather than by editing it.
Input tax and the reverse charge
VAT you pay on business purchases is generally recoverable when it relates to taxable supplies and you hold a valid tax invoice. Some costs, often entertainment and certain vehicles, are blocked. Services bought from suppliers abroad usually fall under the reverse charge: you account for the VAT yourself and, where eligible, recover it on the same return. Mark these purchases when you enter them, so they do not get lost at quarter end.
Returns and records
Returns summarise output and input VAT for each tax period. Whatever the form looks like, the preparation is the same:
- Agree the period with the dates your tax authority assigned.
- Count only issued invoices and credit notes, and bills for goods or services received.
- Split sales by treatment, and purchases into recoverable, blocked and reverse charge.
- Tie the totals to your output and input VAT accounts in the ledger.
- Keep invoices, import documents and working papers for the period the law requires.
E-invoicing: watch the announcements
Oman's Tax Authority has announced a national e-invoicing programme, and other GCC countries are moving in the same direction. Requirements, phases and technical standards are set locally and published over time. Follow your tax authority's announcements, and ask any software vendor exactly what it supports for your country today rather than what it plans.
Setting up VAT in your accounting software
- Create tax codes for each rate and treatment you actually use, and default each product and service to the right one.
- Put your tax registration number on your invoice template, and collect it for business customers.
- Keep output VAT and input VAT in separate ledger accounts, with blocked input tax visible.
- Record the currency and exchange rate on foreign-currency invoices.
- Close each period once the return is prepared, so the figures cannot change underneath you.
Finally, agree a monthly rhythm with your accountant: reconcile, review the VAT accounts and close the month, so the quarterly return becomes a summary of work already done.
Where NAQIX fits
NAQIX sets up taxes per legal entity, so an Oman company and a Bahrain company can each carry their own VAT rates, tax registration number and invoice templates, with subscriptions in OMR or BHD. Sales, purchasing, inventory and accounting post to the same ledger, where output and input VAT sit in their own accounts and every figure opens into its documents for your accountant to review.
NAQIX does not provide a native Oman or Bahrain VAT return form, a filing connection or an e-invoicing connector. Your accountant prepares the return from the books and files it with the tax authority. The NAQIX page for Oman and the NAQIX page for Bahrain say the same, and the Tax & compliance and Accounting & reports pages list the features. Confirm your local invoice and reporting requirements during the demo.