Oman Guide: Impact of Oman VAT Law on Healthcare/Medical Sector

VAT in Oman
Impact of Oman VAT Law on Healthcare/Medical Sector

The application of VAT will have a positive impact on economic and social development and the international competitiveness levels of the Sultanate while strengthening its financial standing, which will help contribute to building a sustainable economy. The tax collected will provide additional financial resources for the state that will enable it to improve public services and support the continued development of infrastructure in the future. 

The Sultanate of Oman is noted for its strong fundamentals in the national healthcare system. The country’s healthcare sector has witnessed commendable growth over the last few decades. While the government has a strong presence in the sector, making available advanced health solutions and patient care services to people, it has always welcomed and encouraged the private healthcare providers to contribute to transforming Oman into a regional healthcare hub.

How large is the healthcare sector in Oman?

Oman has nearly 70 quality hospitals, with over 6,400 beds, offering a range of specialized and general patient care services across the country. Its healthcare system greatly benefited from foreign medical expertise which in turn helped improve the skills of the country’s homegrown medical professionals.

What are the budgetary requirements of healthcare services?

More than 80 percent of the sultanate’s total health expenditure is borne by the Ministry of Health, and the budgetary allocation for the sector stands at RO1.3bn. The healthcare sector is poised to witness exciting developments which include mega health projects such as the US$1.5bn Sultan Qaboos Medical City (SQMC) in Muscat and the US$1bn integrated medical tourism project in Salalah called the International Medical City (IMC).

How much VAT is imposed on healthcare/medical care services? 

Oman has a universal health care system that is free for citizens at the point of delivery and offered to expatriates at subsidized rates. To ensure that the tax does not affect the inflation rate and the cost of living of average citizens, the healthcare sector and goods and services related to medical care (drugs and equipment), are not covered by Oman value-added tax Law. Moreover, the items used by people with disabilities along with the import of supplies for charitable organizations are all exempt from tax. 

The entitlement to apply the 0% rate for healthcare is subject to strict conditions. As such, robust VAT processes and systems must be in place to ensure the correct VAT treatment is applied. Failing to get this right could lead to assessments and penalties from the Federal Tax Authority (FTA), as well as costly commercial implications.

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