Saturday 20 / September / 2025
Muscat: While value added tax (VAT) is expected to come into effect in Oman on April 16, 2021, a number of goods and services have been granted exemption.
VAT is expected to contribute about OMR400 million to the economy every year, about 1.5 per cent of the country’s gross domestic product (GDP), and with about a month left before VAT is brought in, the regulations regarding how the tax will be collected have been issued.
Saud Nassir Al Shukaili, Chairman of the Tax Authority, on Sunday issued Decision No. 53/2021 promulgating VAT Law’s executive regulation, based on the provisions of Royal Decree No. 121/2020 on VAT Law.
The regulations include all of the procedures concerning bringing the provisions of the VAT law into effect, such as procedures for payment, registration, and collection of the tax, and for raising objections or concerns with regards to taxes imposed.
“All of the necessary preparations and requirements for the value added tax, which has been scheduled to be implemented on 16 April, have been completed,” said Al Shukaili.
“Issues relating to taxation, such as the laws and executive regulations, preparing the necessary computer equipment, setting up online links to the bodies that govern taxation in Oman, and providing training on VAT to the workers at the Tax Authority” are some of the measures that have been enacted ahead of the arrival of VAT.
Guidance manuals have also been drafted for some sectors, workshops and panel discussions have been organised to spread awareness, and instructions on how to register for VAT have also been issued.
VAT working groups have been formed across a number of sectors, including oil and gas, finances, and telecommunications.
Companies which are required to register for VAT have also been given sufficient time to update their accounting systems and other operations so that they comply with the new regulations. Some 93 essential commodities will be subject to zero-rate taxation.
Moreover, a number of services across many sectors, including education, healthcare, and financial sectors have been exempt from tax.
Education programmes at all academic levels, including kindergarten and nursery, higher education, vocational and technical education, classes for the elderly and people with disabilities, and language courses will not be subject to VAT.
Good and services also directly related to education, and provided by licensed institutions, such as accommodation, food and drink expenses, cultural and educational events, and sales of stationery and school supplies will also not be taxed.
In terms of financial transactions and services, a number of operations, including depositing funds in current and savings accounts, supply and issuance of financial records such as derivatives, futures contracts, shares, and bonds, as well as the transfer of these instruments will not be taxed.
All financial services under Islamic banking procedures are also tax-free, provided they are handled by an individual/organisation licenced to practice these operations.
Tax-free operations can also be carried out by companies involved in the domestic transportation of people by land, air, or sea. These include services that run according to a pre-set schedule, as well as public taxis that operate for the general public.
Medical care services and the goods associated with them, as well as services and equipment needed for disabled people and those receiving therapy, are also exempt from VAT.
Goods, services included under zero tax
l Basic food supplies
l Medical care and related items
l Education services and supplies
l Financial services
l Undeveloped lands
l Resold residential real estate
l Transport services
l Residential homes for rent
l Medicines and medical equipment
l Investing in gold, silver, and platinum
l International transport operations and related services
l Sale of search and rescue planes and boats
l Crude oil and its derivatives
l Commercial sea, air and land transport operations and related services
l Assistance provided to people with disability, and receiving therapy
