VAT To Be Introduced In Oman From April 2021

On 12 October 2020, Sultani Decree 121/2020 in relation to the implementation of value added tax (“VAT”) in Oman was issued (the “VAT Law”). Following the introduction of VAT in Saudi Arabia, the United Arab Emirates and Bahrain, Oman will be the fourth GCC country to implement VAT in the region.

The VAT Law will set out the general principles for the application of VAT in Oman in line with the Unified GCC Agreement for Value Added Tax. The VAT Law is expected to be published in the Official Gazette on 18 October 2020 with an effective date for the introduction of VAT in April 2021.

The VAT Executive Regulations will provide more detail on specific areas of the Law and are expected to be published by December 2020.

Although the information currently available is limited, the Oman Tax Authority has begun to issue some information on the VAT Law through its social media channels, including that the following categories will not be subject to VAT at the standard rate of 5%:

1.  Basic food commodities.
2. Medical care services and associated goods and services.
3. Education services and associated goods and services
4. Requirements for people with disabilities.
5. Supplies for charities.
6. Financial services.
7. Undeveloped lands (vacant lands).
8. Resale of residential properties.
9. Passenger transport services.
10. Renting out real estate for residential purposes.
11. Supply of medicines and medical equipment.
12.  Supply of investment gold, silver and platinum
13. Supplies of international transport and interchange of goods or passengers, and the supply of associated services; the supply of marine, air and land transportation means intended for the transport of goods and passengers for commercial purposes, and the supply of goods and services associated with transport.
14. Supply of rescue and aid aircraft and vessels
15. Supply of crude oil, petroleum derivatives and natural gas.

The issue of the Royal Decree is a significant and long-awaited step in the introduction of VAT in Oman. Although further guidance is expected over the coming days and weeks, businesses should consider immediate steps on how to best prepare and assess the impact of VAT on their business activities in Oman.