Oman Guide: What Is The VAT Impact On Services Sector In Oman?

VAT in Oman
What Is The VAT Impact On Services Sector In Oman

The implementation of any major tax in an economy generally impacts every sector and the VAT in Oman is no exception either. The effect of the tax varies from one sector to another, depending on how the implementation would take place. For instance, certain sectors are largely exempt while others might be mostly included under the standard rate. The impact of the VAT for services sector in Oman would depend on the type of service in question.

Which services are exempt from the VAT in Oman and which aren’t?

A quick look over the list of exempted and zero-rated goods and services clearly shows that the tax mostly excludes the essential ones. The same applies to the VAT for services sector in Oman, with the tax being charged at standard rates only on certain services. The services related to the supply of means of transport for the transportation of goods and people have been zero-rated. In case of a service that is exempt from VAT in Oman and is supplied to territory outside GCC, it would fall under the zero-rated category.

A number of relatively essential services are exempt from the value­-added tax. These include:

  • Financial services in Oman: These include the services offered by the banks, insurance companies, investment houses, lenders, etc. Imposing an additional tax may have potentially deterred people from availing certain services and it would have proven detrimental to the economy.
  • Educational services: Indeed, educational services are essential in contemporary times. Considering the fact it is difficult for many families to afford the education of their children, exempting these services has certainly been a smart choice.
  • Healthcare services: The VAT for services sector in Oman also exempts healthcare services. In Oman, the healthcare sector is rather universal in nature and the government tries to ensure that everyone can enjoy healthcare services with ease.
  • Local passenger transport: Needless to say, individuals from various strata of the society use the means of local passenger transport to commute. These include the low-income groups too, and an increase in the cost of these services would have put them in a tough spot.

Hence, apart from the services that have been exempted or zero-rated, all of the rest would attract the standard rate of VAT in Oman. The rate has been fixed at 5% for all the goods and services on which VAT is applicable.

Is the way of the implementation of VAT for services sector in Oman beneficial?

It is necessary to understand that the reason why the VAT in Oman has been implemented is that the economy is struggling due to the pandemic. The value-added tax would infuse the economy of Oman with additional money that would help it regrow. However, it isn’t viable for a country to enjoy economic growth at the cost of the affordability of the citizens. The way how the VAT for services sector in Oman has been implemented is quite lenient. Leaving out most of the essential services as zero-rated or exempted, the VAT law ensures that the cost of living of the poor wouldn’t be impacted adversely.
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