Oman Guide: How the transport sector is affected by Oman VAT Law?

VAT in Oman
How the transport sector is affected by Oman VAT Law?

All the relevant taxation laws and regulations are implemented, measured, and evaluated by Secretariat General for Taxation (SGT) in Oman Sultanate. SGT works in close coordination with Directorate General, both are the branches of the Ministry of Finance, to research, investigate and assess tax implications. 

The transport sector of any country is a major part of its economy providing transit services to people and goods as well as it plays an essential role in enhancing cross-border trade. Hence, under the Common VAT Agreement signed by all members of GCC, there has been given flexibility to each State in relation to the treatment of VAT in the transportation sector. In Oman, the main government body administering the transport sector is the Ministry of Transport which establishes Oman Logistic Centre to oversee segment activities. 

How much VAT is imposed on the Transportation Sector? 

Value Added Tax will not be imposed on companies involved in supplying or operating vehicles that transport goods and passengers, by land, sea, or air. Moreover, businesses involved in the supply of rescue and emergency service aircraft and other vehicles, as well as those operating in supplying crude oil and its derivatives, and natural gas, will also not need to pay VAT.

All the International transportation that is movement from Oman to outside Oman and vice-versa is zero-rated whereas local passenger transport is exempt and local transport of goods is subject to VAT at 5%. As it is a well-known fact that the transportation sector involves freight forwarder, agent, shipping line, feeder operator, etc. thus it is highly recommended to consider and calculate the VAT impact on different charges for providing services. Executive Regulations is expected to provide more clarity on this matter. 

What is Oman’s strategic objective regarding Omani ports? 

It has been of utmost concern for the Oman government to develop and expand the transportation sector by easing congestion and boosting capacity through investment in infrastructure and technology. This led to the development of new ports and road links, along with route expansion for national airline carriers. Now, Omani ports are connected with 86 ports across 40 countries. 

What is the importance of Oman’s favorable location in the transport sector in Oman? 

Transport and logistics have become an essential part of the Government’s national strategy due to its strategic location at the south-eastern coast of the Arabian Peninsula, especially for the movement of goods and people by sea and air. It is also one of the five key areas in the Oman Sultanate’s efforts to diversify away from its dependence on hydrocarbons. 

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