Muscat: The Value Added Tax (VAT) Law issued on Monday under Royal Decree No. (121/2020) will come into effect 180 days after its publication in the Official Gazette.
Oman will join the league of 160 countries that apply value-added tax around the world.
The VAT is an indirect tax whose value is borne by the final consumer, while the seller calculates and collects the tax and pays it to the tax authority. The tax on consumption will be applied in the Sultanate at a basic rate of 5 percent.
This tax will be imposed on most goods and services (with specific exceptions in the law and regulations) at every point of sale, that is, at every stage of the supply chain, and it will also be imposed on the import of goods into the Sultanate with specific exceptions in the law and regulation as well.
The unified value-added tax agreement for the GCC countries signed in November 2016.
The five percent VAT rate to be applied in the Sultanate is the lowest in the world. Therefore, its impact on the per capita cost of living in the Sultanate will be limited.
It may be noted the VAT applied in more than 160 countries varies between five percent and 27 percent.
The tax is expected to provide an additional resource for the state's public finances to ensure the continued quality of public services, and it will also support the achievement of the Sultanate's goals to reduce dependence on oil and other hydrocarbon products.
It is believed that the application of the value-added tax will have a positive impact on the economic and social development and the international competitiveness of the Sultanate, as the financial resources obtained from it will contribute to building a sustainable economy for future generations, and will also contribute to improving public services and continuing the development of infrastructure in the future.
The application of this tax will contribute to generating more stable and predictable tax income in good and difficult economic conditions, and its effectiveness lies in the lower costs of administration and collection.
The business sector will act as a tax collector in the Sultanate and will bear only the costs of imposing, collecting, and claiming value-added tax and complying with tax obligations under the law and regulations, so that the registered establishments add this value to the taxable goods and services they provide, provided that the tax is borne by the final consumer receiving these goods or services.
The items not covered under VAT are basic food commodities; medicine and medical equipment and related goods and services; education and related goods and services; financial services; undeveloped lands; resale of residential properties; passenger transport services; renting real estate for residential purposes; gold, silver and platinum; supplies of international transport and interchange of goods or passengers and the supply of related services; rescue and aid aircraft and vessels; crude oil, petroleum products, and natural gas; supply of means of sea, air and land transport for the transport of goods and passengers for commercial purposes; supply of goods and services related to transport; and supplies for people with disabilities and charities.
The tax is expected to provide an additional resource for the state's public finances to ensure the continued quality of public services, and it will also support the achievement of the Sultanate's goals to reduce dependence on oil and other hydrocarbon products.
It is believed that the application of the value-added tax will have a positive impact on the economic and social development and the international competitiveness of the Sultanate, as the financial resources obtained from it will contribute to building a sustainable economy for future generations, and will also contribute to improving public services and continuing the development of infrastructure in the future.
The application of this tax will contribute to generating more stable and predictable tax income in good and difficult economic conditions, and its effectiveness lies in the lower costs of administration and collection.
The business sector will act as a tax collector in the Sultanate and will bear only the costs of imposing, collecting, and claiming value-added tax and complying with tax obligations under the law and regulations, so that the registered establishments add this value to the taxable goods and services they provide, provided that the tax is borne by the final consumer receiving these goods or services.
The items that are not covered under VAT are:
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