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Value Added Tax (VAT) in Oman

1. What is VAT?

Value Added Tax (or “VAT”) is an indirect tax on the consumption or use of goods and services and is applicable in the Sultanate of Oman effective 16 April 2021 at a standard rate of 5%.

VAT is charged at each step of the supply chain. Ultimate consumers generally bear the VAT cost while businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government.

Will VAT cover all products and services?

VAT, as a general consumption tax, will be applicable at 5% to all transactions of goods and services, unless specifically exempted or subject to zero-rate VAT.

International transportation is zero-rated as per the published Law and Regulations in Oman. Accordingly, no VAT will be charged on the international shipping fee, subject to any changes in or clarifications to the current Oman Law and Regulations.

What are the VAT-related responsibilities of businesses?

Generally, VAT-registered businesses:

• Must charge VAT on taxable goods or services they supply under a valid tax invoice in line with the requirements specified in the applicable law;

• May reclaim any VAT they have paid on business-related goods or services subject to the Law and Regulations in Oman;

• Keep a range of business records which will allow the government to check that the business reports and pays the correct amount of VAT and claims VAT in accordance with the Law and Regulations in Oman.

Can you claim back the VAT, if applicable, on goods or services charged to you?

If you are a VAT registered business in Oman, you may be able to claim back the VAT charged to you, subject to the VAT Law and Regulations in Oman.

We recommend you consult with your tax consultants to obtain more clarification on your eligibility to claim the VAT credit and comply with the requirements of VAT Law and Regulations in Oman.

Will domestic deliveries in Oman be subject to VAT?

Yes, where the pick-up and delivery of shipments is within the country of Oman, all charges related to the domestic delivery will be subject to 5% VAT and Aramex will charge VAT in addition to the shipping charges.

For example: If shipping charges are OMR 50, 5% VAT will be applicable on OMR 50 and the price including VAT will be OMR 52.5 (50 * 5% = 2.5 being the VAT)

Will VAT apply on international shipping charges for export of shipments from Oman to overseas locations?

No. International shipping charges for export of shipments from Oman to outside Oman are zero-rated. Therefore, Aramex will not charge VAT on the international shipping charges invoiced by Aramex.

Will VAT apply on import related shipping charges?

No. VAT is not applicable on shipping charges where shipments move from outside Oman into Oman. Hence, Aramex’s charges for International transportation of goods into Oman will not be subject to VAT.

Will VAT apply on the goods imported into Oman from countries outside Oman?

5% Import VAT is applicable on all taxable goods imported into Oman. As per the Oman VAT Law and Regulations, Import VAT is chargeable on total value of goods including:

• CIF (cost of product, insurance and freight) Value

• Customs Duties (if applicable), and

• Excise Tax (if applicable)               

Will VAT apply on storage, information and document management services provided in Oman?

5% VAT will be applicable to all transactions of goods and services unless specifically exempted or subject to zero rate VAT. Storage, information and document management, and document services provided in Oman will be subject to 5% VAT.

Where can we find more information on VAT?

Please find the useful links on VAT for further information:

GCC VAT agreement:  http://www.legalaffairs.gov.bh/Media/LegalPDF/L4718.pdf

Oman VAT Law: https://tms.taxoman.gov.om/portal/web/taxportal/vat-tax

Oman VAT Regulations: https://tms.taxoman.gov.om/portal/web/taxportal/vat-tax

Oman VAT FAQs: https://tms.taxoman.gov.om/portal/web/taxportal/vat-tax