Oman Guide: What Is The VAT Impact On Food & Beverages Sector In Oman?
In April 2021, Oman became the fourth country in the GCC to introduce value-added tax, after KSA, UAE and Bahrain. The VAT system in Omanaligns with the VAT framework of the GCC. At five percent, the Vat in Oman is one of the lowest VATs in the world. While the number of items exempted from VAT is limited, Oman still has the highest number of zero-ratings in this region. A large section the items that the Oman’s Government has exempted from VAT comprises of food and beverages. The government would charge a VAT of 5% on food items which have not been specifically exempted.
Which of the food and beverages are exempt from Vat in Oman?
The Oman’s Government has primarily focused on keeping essential items free of value-added tax and this justifies why so many of the zero-rated items are food items. The list of items exempt to Vat for Food & Beverages sector in Oman is quite similar to the list of items free from customs duty. The food items and beverages that have been exempted are:
- Dairy: Long-life milk packages larger than a litre and powered, granular or solidified milk with fat content over 1.5% by weight would be exempted. Other milk products, such as cheese, yoghurt and curd are in the list too.
- Poultry, meat and fish: More than a dozen varieties of fish, broiler chickens, layer chickens, meat of lamb, sheep, goat and bovine animals and edible offal from camel, sheep and goat, etc. are VAT-free.
- Fruits and vegetables: A large number of commonly consumed fruits and vegetables in Oman, including dates, olives, tomatoes, guavas, oranges, etc. are exempt.
- Cereals: The Vat for Food & Beverages sector in Oman would not apply to certain cereals, such as thin and normal wheat, wheat flour and rice, be it wholly milled or semi milled.
- Other items: The other zero-rated items include coffee, tea, cardamom, refined sugar, baby food supplies, ordinary bread, water, etc.
Thus, the government has exempted more or less all the food and beverages that can be said to be essential and form a major part of meals.
What does the Vat for Food & Beverages sector in Oman imply for the consumers?
As the essentials are mostly free from VAT in Oman the consumers do not have much to worry about. There would not be any changes in the prices of the zero-rated items due to the implementation of VAT. However, there might be a slight spike in the price of the items not exempted from the tax. This depends on whether the brands choose to add VAT by increasing the total price or decreasing their profit margins.
Chances are very high that various brands offering the items not exempted from Vat for Food & Beverages sector in Oman would offer ‘VAT-free prices’. This implies that they would curtail their own profit to remain competitive and the end-users would actually pay the VAT while still shelling out the same as before. In general, the VAT in Oman would not impact the food and beverages sector massively due to the large number of zero-rated items under this category.
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