Exempt Supplies in Oman VAT


Yarab A, Mar-02-2021

What are exempt supplies?

Exempt supplies are non-taxable supplies which are exempted from VAT. In simple words, on supply of goods or services which are notified as exempt, no VAT is levied. The important point that needs to be remembered here is that businesses will not be allowed to claim Input vat deduction on VAT paid on the purchases.

Example of exempt supplies and Input VAT implication

Al-Ameen LLP purchased raw materials worth 1,000 OMR with VAT 5% i.e.50 OMR. The raw materials are used to produce the finished product which is exempted from the VAT. Al-Ameen sold the finished products for 1,100 OMR.

In the above example, Al-Ameen will not charge VAT on their sale since the finished product is exempt from VAT. On the other side, they will not be allowed to claim the input VAT deduction of 50 OMR which was paid on the purchase of raw materials.

Outward supply

No VAT will be charged on the supply

Inward Supply

(Used in supplying finished product or service which is exempt)

No Input VAT deduction

List of exempt supplies in Oman VAT

The following are supplies that are exempt from the VAT. It is important to note that specific conditions and guidelines will be issued in executive regulations pertaining to supplies listed below.

  • Financial Services.
  • Healthcare Services and related Goods and Services.
  • Educational Services and related Goods and Services.
  • Undeveloped land (bare land).
  • Resale of residential properties.
  • Local passenger transport.
  • Rental of properties for residential purposes

Zero-Rated supplies in Oman VAT

VAT Registration Deadline in Oman

List of goods import supplies that are exempt under Oman VAT

  • Imported Goods in cases where the supply of such Goods is exempted from Tax or subject to Tax at a rate of zero per cent in the destination point of entry.
  • Imported Goods in favour of diplomatic and consular Bodies, and international organizations, and to Heads and members of consular and consular bodies certified by the Sultanate, on the condition of reciprocity.
  • Anything imported to the armed forces and internal security forces in all its divisions such as ammunition, weapons, supplies, and military means of transport and its parts.
  • Personal effects and used household appliances brought by citizens residing abroad and foreigners who are coming to stay in the country for the first time.
  • The supplies for non-profit charities.
  • Returned Goods

Exemption in case of baggage and gifts

Personal baggage and gifts accompanying travellers arriving in the sultanate, and requisites for people with special needs are exempt from Tax. These will be exempted only when the specific conditions and rules mentioned in the regulations are met.

Broadly, VAT exemptions in Oman are given for certain financial services, re-sale residential building, and supply of bare land, local passenger and so on. However, to consider a supply as exempted from the VAT, the specific conditions mentioned in the Oman VAT Act and Executive Regulations need to be fulfilled.

Know more about Oman VAT



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