Does Oman Have VAT?
Short Answer
Yes, Oman introduced a value-added tax at a standard rate of five percent on 16 April 2021. The VAT applies to most goods and services, with specific exemptions for essential items including basic food products, healthcare, and education.
Detailed Answer
Oman was the fourth GCC member state to implement VAT, following the United Arab Emirates, Saudi Arabia, and Bahrain. The tax was introduced as part of the GCC Unified VAT Agreement, a framework adopted by all six member states to diversify government revenues away from hydrocarbon dependence.
The standard rate of five percent applies to most commercial transactions involving goods and services within Oman. However, the government designed the system with important exemptions and zero-rated categories to protect lower-income residents and support key sectors. Essential food items, medical services, educational services, and financial services are either exempt or zero-rated.
Exports of goods and services outside Oman are zero-rated, meaning exporters can reclaim input VAT paid on their purchases. This design ensures the tax does not disadvantage Omani exporters in international markets. The tourism sector benefits from a VAT refund scheme for international visitors.
Businesses with annual revenues exceeding the mandatory registration threshold of thirty-eight thousand five hundred Omani rials must register for VAT, collect the tax on sales, and file regular returns with the Oman Tax Authority. Smaller businesses may register voluntarily. The digital filing system has streamlined compliance.