Oman's Value Added Tax Law establishes a graduated system of penalties for breaching tax obligations, starting with an additional tax of 1% per month for late payment, extending to administrative fines of up to OMR 10,000, and a special penalty for tax evasion cases of 300% of the tax difference, in addition to criminal penalties of imprisonment and fines in the most serious cases.

Additional Tax for Late Payment

The law defines the additional tax as a tax imposed at 1% of the value of the unpaid tax for each month of delay or part thereof, starting from the end of the period specified for payment until the date of actual payment.

Administrative Fines

The executive regulations set two tiers of administrative fines that the Chairman of the Tax Authority may impose. The first tier is a fine of not less than OMR 500 and not more than OMR 5,000, in cases such as failing to submit tax returns by the specified deadline. The second tier is a fine of not less than OMR 1,000 and not more than OMR 10,000, in cases such as recovering a tax amount based on incorrect documents.

Penalties for Inaccurate Declarations and Tax Evasion

Where a taxable person fails to declare the true tax in its return, a fine ranging between 1% and 25% of the tax difference may be imposed. In established cases of tax evasion, a fine of 300% of the tax difference related to that evasion may be imposed.

Criminal Penalties

The law punishes with imprisonment and a fine of not less than OMR 1,000 and not more than OMR 10,000, or either of these two penalties, in cases such as deliberately refraining from issuing a tax invoice or keeping proper accounting records. The penalty is increased to imprisonment and a fine of not less than OMR 5,000 and not more than OMR 20,000 in more serious cases, such as deliberately refraining from registering or submitting forged returns or documents to evade the tax.

The Difference Between Administrative and Criminal Penalties

The law clearly distinguishes between two types of penalties. An administrative fine is imposed directly by the Chairman of the Tax Authority without the need for a court ruling, and it is reserved for procedural breaches such as late filing of returns or failing to display the registration certificate. Criminal penalties of imprisonment and a fine, on the other hand, may only be imposed by a ruling of the competent court based on a request from the Chairman, and they are reserved for the most serious deliberate acts, such as forgery or intentional tax evasion.

Legal References

For questions about your specific situation, you can ask the Oman Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.