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Exempt supplies are non-taxable supplies that are exempted from VAT. In simple words, on the 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.
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.
No VAT will be charged on the supply
(Used in supplying finished product or service which is exempt)
No input VAT deduction
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.
Personal baggage and gifts accompanying travelers 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 buildings, and supply of bare land, local passengers, 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.
Exempt supplies are non-taxable supplies that are exempted from VAT. In simple words, on the supply of goods or services which are notified as exempt, no VAT is levied.
No. If you are a taxable person or business selling exempt supplies, even if your revenue exceeds the prescribed threshold, you do not need to register for VAT.
No. Businesses will not be allowed to claim Input VAT deduction on VAT paid on the purchases.
No. A supplier making exempt supplies is generally not allowed to recover input VAT in relation to such supplies.
Know more about Oman VAT
Introduction to Oman VAT, VAT Rate in Oman, Who Should Register Under Oman VAT, VAT Registration Guide in Oman, Zero-Rated supplies in Oman VAT, Business Benefits of Voluntary VAT Registration, How to Calculate VAT in Oman?, What are the Taxable Goods and Services Under VAT in Oman?, How does VAT affect Omani businesses?, Stay VAT Compliant with TallyPrime’s Amazing Capabilities, What Are the Benefits of Applying VAT in Oman?, How is Introduction of VAT going to Affect Oman Economy?, VAT Invoice in Oman, What is VAT and How does it work?, VAT Registration Deadline in Oman