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Oman VAT launch 16 April 2021

Fourth Gulf Cooperation Council state to join VAT and customs union

The Gulf State of Oman is to introduced Value Added Tax on 16 April 2021. It will be the fourth of the six Gulf Cooperation Council States to implement the indirect tax. The others are: Saudi Arabia; UAE; and Bahrain. Kuwait and Qatar have still not confirmed their plans.

The mandatory Oman VAT registration threshold is OMR 38,500. However it is possible to apply for a voluntary registration above OMR 19,250. Non-resident businesses will be required to VAT register if they provide taxable supplies.  Oman e-invoicing is likely to be implemented in 2023.

Our VAT Filer can accurately populate any country VAT return with verified data from our VAT Calculator or VAT Auditor services.

Certain supplies will be exempted including:

  • basic foodstuffs;
  • rent;
  • healthcare;
  • public education;
  • public transport;
  • sale of real estate;
  • sale of greenfield land sites
  • Import of medical equipment, certain precious metals, certain transport equipment;
  • crude oil imports;

In the past months, it had looked likely that the Gulf state would delay the introduction of the consumption tax due to the worsening COVID-19 situation. Facing a 2.8 per cent economic contraction this year and a government deficit of 16.9 per cent of gross domestic product (GDP), according to the International Monetary Fund, Oman has cut public spending to contain the financial leakage caused by lower oil prices and the downturn caused by coronavirus lockdowns.

Oman would be the fourth of six Arab Gulf states to introduce VAT as part of a 2016 VAT union agreement. The six states had agreed to implement a harmonised 5% regime. So far, only Saudi Arabia, UAE and Bahrain have done so. Saudi Arabia raised VAT to 15% on 1 July 2020 due to the collapse of oil prices during the COVID-19 pandemic.

Like the other oil-rich Gulf states, Oman has suffered from the drop in oil prices, and is looking to stabilise its revenues through the introduction of the consumption tax. The decline in oil revenue in recent years means Oman’s sovereign debt as a percentage of GDP has been steadily increasing, and is expected to grow above 60 per cent this year, according to a note published earlier this month by Fitch Ratings.

Arab Gulf GCC VAT implementations

2023 Kuwait decides between VAT or excise taxes
2023 Qatar delays VAT on inflation worries
Jan 2022 Bahrain doubles VAT to 10%
16 Apr 2021 Oman introduces 5% VAT
1 Jul 2020 Saudi Arabia trebles VAT to 15%
1 Jan 2019 Bahrain launches 5% VAT regime
1 Jan 2018 Saudi Arabia and UAE introduce 5% VAT regime
2016 VAT and Customs Union agreement: Bahrain; Kuwait; Oman; Qatar; Saudi Arabia; UAE United Arab Emirates

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