Oman Guide: What is Zero Rated and Exempt Supply Under VAT in Oman?
Oman VAT Law reflects the principles set up in the Unified GCC Agreement comprising 106 Articles which are divided into 13 Chapters. The standard rate of VAT will be 5% with certain supplies being zero-rated or exempt from VAT.
Exempted Supplies under Oman VAT Law
The Law provides an exemption from Tax to the subsequent supplies in accordance with the conditions outlined in the Regulations:
- Financial services
- Healthcare services and related goods and services
- Educational services and related goods and services
- Undeveloped land (bare land)
- Resale of residential properties
- Local passenger transport
- Renting properties for residential purposes
All the goods where the supply of those Goods is exempt from Tax or subject to Tax at zero rates in the country of final destination will be exempted under Oman VAT Law. Moreover, goods used by diplomatic, consular bodies, and international organizations, and for the heads and members of diplomatic and consular bodies accredited by the Sultanate are also exempted provided that the aforementioned organizations also grant the same Tax exemption to Oman.
Exempted imported goods also include goods for the armed forces and internal security forces in all their divisions including ammunition, weapons, military equipment, means of transport, and parts thereof. In addition to that, personal effects and used household appliances brought by citizens residing abroad, and foreigners who are coming to reside in the country for the first time are given tax exemption.
According to Oman Tax Law, supplies for non-profit charities and returned goods are exempted from Tax along with imported Goods placed under customs duty suspension. Also, personal baggage and gifts accompanying travelers arriving in the Sultanate, and requirements for people with special needs shall be exempted from Tax.
What are Zero Rated Tax supplies in Oman VAT Law?
Subject to the limitations mentioned in the Executive Regulations, the following supplies will be zero-rated:
- Supply of food items specified by a decision of the Head.
- Supply of medicines and medical equipment in accordance with the rules specified in a decision by the Head, and after coordination with the competent authorities.
- Supply of investment gold, silver, and platinum.
- Supply of international or intra-GCC transportation of Goods or passengers, and Supply of Services related to such transportation.
- Supply of means of air, sea, and land transport that are designated for the transportation of passengers and goods for commercial purposes and Supply of related Goods and Services.
- Supply of rescue and assistance planes, and boats.
Supplies manufactured outside the GCC shall be subject to Tax at zero rates in case of Export and Supply of Goods and Services to or within a custom duty suspension situation under the Common Customs Law. Additionally, re-export of goods that have been temporarily imported to the Sultanate for repair, refurbishment, conversion, or processing, and services will be charged zero tax rate. According to newly introduced Oman VAt Law, the supply of Services, except the Services specified in Article (24) of this Law, by a Taxable Supplier that has a Place of Residence in the Sultanate to a Customer who does not have a Place of Residence in the GCC, provided the Customer benefits from such Services outside the GCC will be taxed at zero rates.
Supply of Goods or Services from, to and within special economic zones shall be subject to the same treatment prescribed for customs duty suspension situation under this Law. Moreover, the Supply of Goods or Services that are exempt from Tax in the Sultanate when supplied outside the GCC shall be subject to Tax at zero rates.
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