Value-added tax (VAT)
Oman had announced its intention, along with other Gulf Cooperation Council (GCC) member countries, to implement VAT.
On 12 October 2020, His Majesty issued Royal Decree no.121/2020 in relation to the implementation of VAT in Oman, and it was published in the Official Gazette on 18 October 2020. VAT has been implemented in Oman with effect from 16 April 2021. The standard rate of VAT in Oman is 5% and consistent with the GCC Unified Agreement, and there are provisions for zero rating and exemptions in the Oman VAT Law. By global standards, 5% is one of the lowest VAT rates implemented in the world.
The standard rate of 5% VAT will apply on goods and services supplied in Oman, subject to specific exemptions and zero ratings prescribed under Oman VAT law.
Exempt supplies are not subject to VAT, and the input tax cannot be recovered. Examples of exempt supplies include certain financial services, etc.
Zero-rated supplies are subject to VAT at 0%, and the supplier can recover the input suffered on the purchases made. Examples of zero-rated supplies include export of goods and services outside Oman, etc.
Registration for VAT is an online process.
There is a mandatory registration threshold if the total value of annual supplies exceeds or is expected to exceed OMR 38,500. The Oman Tax Authority is expected to release sector specific guides to help business in various sectors prepare for the VAT implementation
There is a voluntary registration threshold if the total value of annual supplies/expenditure exceeds or is expected to exceed OMR 19,250.
Customs duty of 5% of cost, insurance, and freight (CIF) value applies to most non-GCC source goods. Exemptions apply for certain food items, medical supplies, etc.
The 2019 Oman state budget recently introduced excise tax in Oman with effect from 15 June 2019. Excise tax is levied at the following rates:
- Tobacco (including tobacco derivatives), pork products, alcoholic beverages, and energy drinks: 100%.
- Sugar sweetened beverages: 50%.
- Carbonated drinks: 50%
Restaurants/cafes located within a tourist area or managed through franchise agreements are required to levy tourism tax at 4%.
Stamp duty/Property transfer fees
Stamp duty is not applicable however, property transfer fees is applicable on transfer of land and property at 3% of the value to be paid to the Ministry of Housing.
There are no payroll taxes in Oman other than social security contributions (see below).
Social security contributions
A 17.5% social security contribution is applicable to employees who are Omani nationals, but not to expatriate employees. The employee pays a contribution of 7% of salary, and the employer pays the balance of 10.5%. The employer is also required to contribute for insurance for work-related injuries in the amount of 1% of the salary of the employee. This brings the total monthly social security and insurance contributions to be made by the employer to 11.5%.
From January 2021, employers and Omani employees are each required to make a monthly salary contribution at the rate of OMR 1 per OMR 100 of monthly salary (or 1% of payment) as part of the job security scheme implemented. The deduction is expected to be taken from gross salary (including any benefits) and with no wage limit upon which the contributions will be due. The scheme is under the Public Authority for Social Insurance (PASI), and we expect this to be included in PASI bills for January 2021 onwards.
Municipal taxes apply to the following items:
- Property rents: 3%.
- Hotel occupancy: 5%.
- Leisure and cinema houses: 10%.
Oman does not levy any Environmental or Green taxes.