Oman VAT implementation in 2021: The ultimate culmination of years of planning


On April 16, 2021, Oman launched a new VAT system.
As a result, Oman became the fourth member of the Gulf Cooperation Council to implement VAT.


On April 16, 2021, Oman will introduce its latest VAT system. After a June 2016 agreement among Gulf Cooperation Council (GCC) member states and the signing of the Common VAT Agreement, the adoption has been the result of years of preparation.

The Gulf State released its VAT law in mid-October 2020, and it went into effect 180 days after it was published in the Official Gazette. This year’s registration period began on February 1st, and the executive regulations were issued on March 14th.

Since the precise implementation date for the current VAT system was 180 days after the regulations were formally gazetted on October 18, 2020, the date of implementation was April 16, 2021.

GCC Common VAT Agreement

The Common VAT Agreement was ratified by all six Gulf Cooperation Council (GCC) member states in June 2016.
It was decided that each GCC member state must implement a 5-percentage-point VAT scheme. As a result of this deal, Oman will implement a 5% VAT rate in April 2021. When it did so, it became the fourth member of the GCC to implement a VAT scheme, after Saudi Arabia, Bahrain, and the United Arab Emirates.


Most goods and services in Oman will be subject to a 5% VAT, including imports of both goods and services, as well as free supplies. Any suppliers will be excluded, and others will be zero-rated; however, the difference between exempted and zero-rated supplies is critical. No VAT is added in all situations, but where the supply is excluded, the taxable individual making the supply cannot subtract the input VAT, while when the supply is zero-rated, the input VAT would usually be deducted.

Businesses with transactions in this room will be eagerly awaiting the additional guidelines offered by the VAT Regulations on zero-ratings and exemptions, which will help them to properly understand the effect of VAT on their business, cash flows, and actual VAT costs.

The below are the categories of zero-rated supplies of goods and services:

  • exports of products and services
  • supply of certain foodstuffs, subject to Regulation
  • supply of drugs and surgical devices, subject to Regulation
  • provision of investment gold, silver, and platinum
  • provision of international transport of goods and passengers, as well as related services
  • supply of water, air, and land modes of transportation for commercial uses, as well as associated products and services
  • supply of rescue aircraft, rescue vessels, and auxiliary ships
  • supply of crude oil, oil substitutes, and natural gas.

The following are examples of excluded supplies of goods and services:

  • financial services
  • provision of healthcare and related goods and services; provision of education and related goods and services
  • provision of local passenger transport
  • provision of bare land
  • resale of residential real estate
  • rental of residential real estate


Obviously, the cost of living would rise for the majority of people. Oman’s industries would still need time to adapt to the latest VAT regime.
Keeping Oman accounting software compliant with the current VAT system may be one of the challenges the industry faces.


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