Oman to implement 5% Value Added Tax

His Majesty Sultan Haitham bin Tarik has issued a Royal decree to start levying a 5 per cent value-added tax (VAT) in six months’ time, state-run Oman TV said on Monday.

The tax will be on most goods and services, though with some exceptions, according to a video presentation shown on Oman TV.

All six Gulf Arab states agreed to introduce 5 per cent VAT in 2018. Saudi Arabia, the UAE and Bahrain have already introduced the tax, with Riyadh tripling it this year.

Oman, Kuwait and Qatar have not yet introduced the tax.

This tax will be imposed on most goods and services (with specific exceptions in the law and regulations) at every point of sale, that is, at every stage of the supply chain, and it will also be imposed on the import of goods into the Sultanate with specific exceptions in the law and regulation as well.

The unified value-added tax agreement for the GCC countries signed in November 2016.
The 5 per cent value-added tax rate to be applied in the Sultanate is the lowest in the world. Therefore, its impact on the per capita cost of living in the Sultanate will be limited.

It may be noted the VAT applied in more than 160 countries varies between 5 per cent and 27 per cent.

The tax is expected to provide an additional resource for the state’s public finances to ensure the continued quality of public services, and it will also support the achievement of the Sultanate’s goals to reduce dependence on oil and other hydrocarbon products.

His Majesty the Sultan has issued a Royal Decree No. 121/2020 on the issuance of VAT Law.

Applying the VAT in the Sultanate comes as per the unified agreement for VAT in the GCC countries. The VAT will be applied at a rate of 5% on goods and services. There are a wide range of goods and services that are not subject to the VAT.

There are a wide range of goods & services that are not subject to the VAT such as basic foodstuff, healthcare services and goods, education, financial services and supplies for the disabled.