Tourists in Oman entitled to VAT refund on select purchases

As the Sultanate gears up to implement Value Added Tax (VAT) on a variety of goods and services effective from this Friday, April 16, 2021, tourists and business travellers are being assured of a refund on any luxury goods among other purchases being shipped out as part of their personal baggage.

Under the phased system of VAT implementation, only businesses and organisations with more than RO 1 million in annual supplies are liable to charge the new levy where applicable with effect from April 16. They are also required to issue tax invoices and comply with other VAT obligations set out in the VAT Law and its executive regulations.

These executive regulations, published by the Tax Authority recently, also provide greater clarity with regard to VAT refunds that tourists and visitors are entitled to receive on their purchases as they exit the country.

Departing tourists can claim a VAT refund on personal purchases provided the value of these goods are not less than RO 25 (not inclusive of VAT). Moreover, the goods in question should have been purchased not earlier than three months before the departure of the passenger, and must be transported in their personal baggage.

However, ineligible for a refund are cigarettes and other tobacco-related products, food and beverage items, and oil and gas products or their derivatives. Other items could be potentially added to the list of merchandise that is not eligible for a refund, according to tax authorities.

Significantly, the VAT regulations define tourists as individuals who do not have a permanent place of residence in Oman or the wider GCC region. Furthermore, VAT refunds cannot be claimed by those staying in the country for more than three months at a stretch. Crewmembers of a flight, ship, road transport or ferry service are not eligible for a refund as well.

The task of processing refund claims from tourists is expected to be contracted out to an operator. “When the Tourist purchases the goods from the taxable supplier, he must submit an electronic application for refund according to the form prepared by the operator with whom the Authority contracts to manage the refund mechanism, and the supplier must certify the contents of this application’’, the Authority stated in the regulations.

“The operator — if the conditions of refund are met — shall refund the approved tax within 30 days from the date of submitting the refund application, and the value of the tax refunded shall not include the value of the fees charged by the operator to carry out the refund procedures’’, it added.

In the lead-up to the implementation of VAT over the weekend, Oman’s authorities have also been scrambling to factor in a series of measures adopted by the government in recent days to alleviate the impact of the tax on vulnerable sections of the population.

Notable among the measures is the zero-rating of as many as 488 foodstuff items for VAT, up from 93 items originally. Furthermore, the government has pledged to shoulder the VAT burden on power and water, as well as fuel supplies to citizens falling in certain support categories.