Facts behind VAT in OMAN


VAT has been implemented in more than 160 countries around the world.It is an indirect tax paid & charged at each stage of the supply chain for goods & services, bought & sold in the Sultanate.Goods & services for the the Sultanate should also undergo VAT.There are some VAT exempted or zero-rated products/services.

Is VAT applicable for Food & Property? 

VAt is generally applicable for food products  but certain products are zero-rated. 

Some residential property transactions, such as resales and leases are also exempted but for residential leases with certain constraints like (holiday rentals, short-term leases, hotel stays e.t.c ) VAT will be imposed.Commercial property, both sales and leases, will be subject to VAT.

Is VAT applicable for prepaid goods/services? 

VAT may become due if the payments are done towards goods and services prior before the implementation of the VAT Law & the goods/services are supplied after the implementation date(fully or partially).For these cases certain regulations are maintained & thus assistance will be provided.

Is VAT applicable for self-employed individuals?

Based on the wideness of the business & the type of business,self-employed individuals may be included or excluded from VAT implementations.If the business reaches the VAT mandatory registration threshold then the business should undergo VAT implementations or else not needed.As we could retrieve the amount paid for input tax any individual he/she would prefer to register under VAT implementations.

ZERO-RATED or VAT Exempted.

  • Exports (zero-rated)  
  • School fees set out in the regulations (exempt) 
  •  Certain healthcare services (zero-rated) 
  •  Sale of bare, (e.g. vacant land) (exempt) 
  •  Certain financial services, such as a life insurance policy (exempt)

VAT effects on Business & the public.

VAT is an effective tax collection technique for Sultanate of Oman. If any means of supplies are a part of the business, then the business should undergo VAT charging & collection. The business person can be an individual, partnership, corporation or any other legal entity. If the threshold of the annual supplies are more than the business deals, it should register for VAT. Businesses should maintain accurate accounts & financial records. The standard rate of tax is 5% on most goods and services, with a few exceptions.

VAT effects on visitors and tourists?

On taxable purchases, visitors & tourists will face VAT implementations. Under the Regulations with certain conditions like ( type of items eligible for refund, minimum value for a refund to be considered, etc.) they can get a refund.People travelling to & fro in Oman from outside the GCC can only avail this refund.

VAT effects on Oman? 

Even Though VAT regulations in Oman is similar to other countries, in Oman it has a rare model & is the lowest among the international trade .The VAT collection acts as a financial reservoir for the society & helps to enhance the global trade network, thus developing the economy. This enhancement will reflect in the governmental services by facilitating public services to citizens and residents, including hospitals, roads, public schools, parks, waste management and police services. Thus Vat collection is a beneficial fact to improve public aids and also reduces the financial dependence on oil and other hydrocarbon products. As it is minimal in all the steps of collection & contribution the financial commitment by the public is very low. As it focuses on  foreign direct investment rather than personal income taxes, government can own a stable income which will be inflating the economical growth.

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