What Is The VAT Impact On Trading (Export Import) Sector In Oman?

Oman Guide: What Is The VAT Impact On Trading (Export Import) Sector In Oman?

Adhering to the Common VAT Agreement of GCC, the government of Oman has imposed 5% value added tax (VAT) on almost all the sectors. This development came on 16^th April, when Oman became only the fourth nation in the GCC to deploy this tax. Interestingly, the implementation of VAT in Oman comes at a time when the country is struggling to fight off an economic crisis following the pandemic. It is expected that revenues coming from value added taxes would make up around 1.5% of the country’s GDP. Other countries in the GCC to have already implemented VAT include UAE, Bahrain, and KSA. In this post, you will get to know about VAT for trading sector in Oman.

What you should know about VAT for trading sector in Oman

VAT in Oman: Import of Goods

The VAT rate on all goods imported to Oman would be 5%. However, some items have been exempted from this tax, and they come under the zero-rated items. The list of exempted items include:

Goods for international organizations, consular, and diplomatic bodies.
Goods for internal security forces and armed forces, such as military equipment, weapons, and their parts.
Household and personal appliances and gifts that the citizens residing outside GCC or foreigners would be purchasing
Imports and supplies made by non-profit groups in Oman
Returned goods
Gift items and baggage purchased by travelers to Oman, as well as individuals with special needs

Some supplies, that are prepared inside the GCC are considered to be zero-rated imports. This list includes medical equipment, medicines, special foods, silver, platinum, and gold for investments, crude oil, natural gas, oil derivatives, planes and boats for assistance and rescue, and supplies for inter-GCC or international.

VAT in Oman: Import of Services

The recipient or customer in Oman needs to pay VAT for services under the reverse charge system, accounting for the respective output. In case a resident in another GCC state receives the service, the same set of norms would be applicable. The process would continue until both the states consider one another as VAT implementing states.

VAT in Oman: Export of goods and services

The zero tax rate would be applicable for all types of services and goods that are exported outside the GCC. Therefore, no VAT would practically be charged on such items. These items include medical supplies, oil derivatives, tea, water, crude oil, dairy products, and other supplies.

Services and goods that are exempted from tax in Oman will also be recognized as zero-rated supplies when they are exported outside the GCC. Some of these services exempted from VAT include local passenger transport, financial services, residential property resale or renting, and healthcare.

The imposition of VAT for trading sector in Oman is a strategic move to strengthen the country’s economy. This would result in a higher GDP in the coming years, given that revenue inflows in Oman dipped significantly in recent months following the pandemic. The 5% VAT in Oman is applicable for all the sectors, including trading.