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

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

The implementation of VAT in Oman witnessed plenty of exemptions, particularly on essential items and services. However, the tourism and hospitality sectors are not exempt and would attract a 5% value-added tax. The government of Oman introduced this tax to provide the economy with a much-needed boost. The nation has suffered severe economic losses due to the pandemic and the VAT would help to recover from the situation. However, the government does not intend to raise the cost of living in Oman, which explains the reason behind numerous exemptions.

What is the VAT for tourism sector in Oman applicable to?

A majority of the services and goods supplied by the tourism and hospitality sector would attract 5% VAT. These include catering and restaurant services, accommodation at hotels, sightseeing tours, transportation, etc. The VAT for tourism sector in Oman would also be applicable to tour operators. The taxation system may seem a little complex in this case as the tourists may book their tours while outside Oman. However, as they would receive the services in Oman, they would still have to pay the VAT. For hotels, motels and other similar accommodation providers, the value-added tax would apply separately for different revenue streams. This implies that the VAT on food and beverages, recreation, accommodation, etc. would require separate invoicing.

Refund policy for VAT for tourism sector in Oman

The tourists and the business travellers visiting Oman would be eligible for a refund for VAT in Oman on various items, including luxury goods. This refund would be applicable to goods priced above RO 25. During their departure, the tourists can claim a refund, provided that the items are personal purchases. However, the refund claim would be valid only if the purchase took within the last three months of the time of departure. The tourists applying for a refund for tourism VAT in Oman would have to transport these items as a part of their personal baggage.

The tourists who hail from other GCC states would not be eligible for the refund on VAT. However, the VAT for tourism sector in Oman is similar to that of the other GCC member nations. The implementation of VAT would not make travelling to Oman more expensive to these tourists as the same VAT regime exists in their countries too.

Would there be any negative implications of the VAT for tourism sector in Oman?

As the VAT in Oman came into effect only recently, it is hard to predict any negative implications yet. In general, tourists would have to spend 5% more while travelling to Oman, which, according to some, may result in a fall in the number of tourists. It might take some time to know for sure whether the VAT would lower the revenues for the tourism sector.

However, observing other countries that have VAT or GST regimes applicable to the tourism and hospitality sector, negative implications are unlikely. Several nations around the globe charge value-added tax or goods and services tax on these services and supplies but still have a robust tourism sector. Currently, the tourism and hospitality sector in Oman attracts high revenues for the economy and is expected to continue doing so in the years to come. The tourism VAT in Oman would further boost these revenues.

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