A broad range of services provided by banking and financial institutions, as well as the healthcare and education sectors, have been either tax-exempt or zero-rated for Value Added Tax (VAT) when it comes into effect in the Sultanate on April 16, 2021.
These exemptions are detailed in the Executive Regulations for the VAT Law issued by the Tax Authority vide its Resolution 53/2021 earlier this month.
An (unofficial) English-language translation of the Executive Regulations, made available courtesy of well-known consultancy firms MMJS Consulting and Morison Muscat, provides greater clarity with regard to the various economic sectors, activities, goods and supplies that are covered by the VAT Law.
Exempt from VAT are financial services supplied by banks and financial institutions licensed by the Central Bank of Oman or any of the competent authorities.
They include: Provision of loans, their transfers and lending services; Credit, including credit instalments in lease-to-own transactions and credit guarantee; Depositing funds in current, savings and deposit accounts; Supply and issuance of financial instruments such as derivatives, deferred contracts, options and similar transactions; Supply and issuance of shares, bonds and other securities; Transferring ownership of any securities or derivatives related to any securities; and Life insurance services.
Importantly, Islamic financial transactions are also subject to the same exemption, provided such transactions involve a person licensed to engage in Islamic banking.
Furthermore, a wide array of healthcare supplies and services are also exempt from VAT if they are provided by licensed medical institutions.
The list includes: General medicine services, Specialised medicine services, Dental and laboratory services, Psychiatric services, Physiotherapy services, Nursing services in hospitals, nursing homes, or similar licensed institutions; Midwifery services; Diagnostic and therapeutic services for individuals; and Surgical, reconstructive, and cosmetic services.
Also exempt are associated services, such as the Transportation of the sick and wounded in ambulances; Provision of accommodation, food and beverage; Operating room expenses; and Medicines and medical materials.
Excluded from this waiver are services of a commercial nature, such as supplying food and beverage to visitors, securing parking for visitors, and all works that are not included in medical treatment, such as a television set or a telephone call allowance.
The VAT Law also exempts goods and related services provided by educational institutions licensed by the competent authorities in the field of education in the Sultanate.
The list includes: Education in kindergarten and nursery levels; Education at all academic levels; Higher education; Vocational and technical education (theoretical or practical education to qualify people to practice a profession or a craft); Education for the elderly; Education for persons with disabilities, including people with sight, hearing and speaking disabilities; Language Teaching; and Vocational training institutes.
They also cover the following goods and services directly related to education and provided by or through licensed educational institutions exclusively to students and complement education services: Provision of accommodation, food and beverage; Organising cultural, educational or professional activities or seminars; Organising trips, provided that these trips are linked to a specific curriculum; Supplying educational materials, provided that these materials are linked to a specific curriculum; Provision of student transportation; and Provision of school uniforms.
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