The Oman government has decided to implement the VAT system of taxation. As a result, the Sultanate’s Tax Authority, better known as TA, has published a brochure to help people understand more about the need and importance of VAT. In this article, KGRN brings to you some fundamental principles regarding VAT that individuals need to know. Read on to find out more about the need for VAT, how it works and what Oman plans to do regarding the VAT basics.


What is VAT?

Value Added Tax is an indirect form of taxation already implemented in over 160 countries around the world. Almost every type of goods or service, except a few which enjoy exemption come under the purview of VAT. Hence, all such goods and services sold, bought and imported in Oman will be charged under the VAT regime. Throughout every stage of the supply chain, the government will charge and collect the VAT basics. In essence, the process of VAT calculation begins from when the manufacturer purchases raw materials and ends when a consumer buys the finished product.

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How will the VAT affect Omani businesses?

In essence, Omani businesses and companies serve as a tax collector for the Sultanate, and they must bear the cost of charging, collecting, depositing and claiming VAT basics. They will have to go through Omani laws to decide whether or not they have to register under VAT. After registration, the businesses will have to do everything required to maintain compliance. While all companies can voluntarily register under the VAT regime, those who exceed the pre-set annual threshold must do so mandatorily. As a result, such businesses will need an experienced accounting, bookkeeping and invoicing system to remain compliant. KGRN Accounting and Audit Firms will be able to help you greatly in this regard, as we have decades’ worth of experience handling VAT registration and compliance. 

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How will the VAT affect the consumer?

Consumers too will face the impact of the VAT. All eligible goods and services will from now on have an additional taxation component of 5%, as VAT. In most cases, even food items will bear the cost of VAT. However, a few varieties of items will have zero-rating, meaning they will have a VAT rate of 0%. The TA will soon publish a list of all zero-rated basic groceries so that consumers can stay aware and updated of such proceedings. A few items which will enjoy zero-rating under VAT are as follows;

  • Exports 
  • Certain healthcare services

Meanwhile, specific school fees set out in the regulations, the sale of bare or vacant land and individual financial services, including life insurance policies are exempt from VAT.

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Will VAT be payable on properties?

Certain property transactions for residential properties, including lease and resales, are exempt from VAT. Therefore, people who rent out their residential properties will not have to pay tax if the lease follows certain conditions. However, commercial leases, hotel stays and vacations, holiday rentals and short-term leases will be subject to VAT basics. Furthermore, the sale and leasing of commercial properties will be subject to VAT.

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How will VAT affect visitors and tourists?

All tourists, visitors and diplomats will have to pay VAT on their taxable purchases. However, such payments are subject to VAT refunds under certain conditions, which will be mentioned in a detailed report from the TA soon. The VAT refund conditions will depend on the type of item bought, minimum purchase value and entities eligible for a refund. However, such a refund scheme will be available only for individuals travelling from outside the GCC.

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Do self-employed individuals have to register for VAT?

Not all self-employed individuals and businesses have to register for VAT. Some small traders, due to the size or nature of goods they trade-in will not have to register for VAT. However, if your business generates a turnover that exceeds the annual threshold, you will have to register under the VAT regime. In case you don’t fall under this bracket, but still wish to register, you may do so as well to reclaim input tax paid. The TA will release further information regarding the VAT registration threshold, and timelines soon enough. 

For enquiries, call +971 45 570 204 / E-mail:

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