After the issuance of Royal Decree No. 121/2020, Sultanate Of Oman published its VAT Law in the Official Gazette on 18 October 2020 (“VAT Law”). VAT will be imposed in the Sultanate Of Oman at the standard rate of 5% in line with the GCC VAT Agreement effective from 16 April 2021, making Oman 4th GCC country to implement VAT after UAE, KSA and Bahrain.

According to the VAT Law, the VAT regulations, (which will define the details on application of VAT in the state), will be published within six months of the effective date of the law viz. 15th October, 2020.

Key features

  • VAT Registration:
    While the VAT Regulations will determine the mandatory and voluntary registration thresholds, it is anticipated that the registration thresholds would be based on the unified GCC VAT Agreement. Companies that only make zero rated supplies may be exempted from the requirement to register. Non-residents who make taxable supplies in Oman are required to register for VAT, irrespective of the threshold limits. The non-resident can also register for VAT by appointing a tax representative in Oman. Further, two or more persons may form a VAT group if the defined criteria is met.
  • Zero Rating of Supplies:
    Oman will zero-rate certain food items, the export of goods and services, international transportation of goods and passengers, the supply of investment grade precious metals, the supply of specified medicine and medical equipment and crude oil, oil derivatives and natural gas. This same approach of defining a broad list of Zero Rated Products is also adopted by UAE & Bahrain.
  • Exempt Supplies
    Oman will exempt the supply of bare land, financial services, local passenger transport and supply in relation to the lease of residential properties. Furthermore, Oman will exempt the provision of healthcare, education, re-sale of residential real estate and imported goods which are exempt under the GCC Common Customs Law.
  • Transition Provisions
    Supplies of goods or services are considered to have been made after the effective date of the VAT Law where the delivery of goods or completion of the service takes place after either the VAT implementation date or the date of registration, even if an invoice has been issued or the consideration is paid for the supply before either of the two dates above. For continuous supplies made under contracts which were concluded prior to the VAT implementation date or date of registration, the portion of supply made after the VAT implementation date or registration date, as applicable, will be subject to VAT. The consideration mentioned in the contract will be considered inclusive of VAT, unless the contract specifically contains a clause relating to VAT.