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Oman 1 April 2021 VAT implementation

  • Oct 12, 2020 | Richard Asquith

Oman now plans to implement a 5% VAT from 1 April 2021. This is based on a Royal Decree (No 121/2020) approved by Sultan Haitham Bin Tariq Al Said. It should be gazetted by 18 October 2020.

The mandatory VAT registration threshold is OMR 35,000. 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.

Certain supplies will be exempted including:

  • basic foodstuffs; 
  • rent; 
  • healthcare;
  • public education; 
  • puic transport;
  • sale of real estate;
  • sale of greenfield land sites
  • Import of medical equipment, certain precious metals, certain transport equiment;
  • 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.


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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: richard.asquith@avalara.com. He is part of the European leadership team which won International Tax Review's 2019 Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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