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In Oman VAT, free zones and special economic zones are classified as ‘Special Zones’ and accordingly the VAT law and regulation stipulates the conditions that businesses need to comply with. To define, Special zones refer to an area in which the supply of goods and services from, to or within the zones will be treated as zero-rate subject to the conditions prescribed by the authorities and the regulations.
The VAT rate on free zones and special economic zones referred to as special zones will be levied at a zero rate. This will apply to most of the supplies made to or from the businesses operating in the zones. The table below details the VAT applicability on supplies made from/to the special zones.
Form |
To |
Tax Rate |
Special Zone |
Special Zone |
Zero-rate |
Mainland |
Special Zone |
Zero-rate |
Special Zone |
GCC countries |
Zero-rate |
Special Zone |
Oversea (Outside GCC) |
Zero-rate |
Oversea/GCC countries |
Designated Zone |
Zero-rate |
This comes with the defined conditions that a zone itself must meet and as well as businesses located in the zone. Not all supplies will be zero rates, subject to the fulfilment of conditions, some types of supplies will be taxable at 5% VAT.
Read Exempt Supplies in Oman VAT on which tax at 5% is levied even when supplied from or to special zones.
The following zones are currently classified as special zones for the purpose of VAT.
Following are the conditions that a zone needs to fulfil to be considered as a special zone.
The supply or movement of goods to or within free zones will be taxable at a zero rate on fulfilment of the following conditions:
The supply of services to special zones are taxable at zero rate subject to meeting the following conditions:
Want to know the supplies that are not subject to zero rate, even when supplied from or to special zones? Read Exempt Supplies in Oman VAT.
In Oman VAT, free zones and special economic zones are classified as ‘Special Zones’ and accordingly the VAT law and regulation stipulates the conditions that businesses need to comply with.
The primary purpose of a free-trade zone is to remove from a seaport, airport, or border those hindrances to trade caused by high tariffs and complex customs regulations.
Three free zones. These industrial estates are located in key locations of Oman such as Rusayl, Salalah, Sohar, Sur, Nizwa and Buraimi.
For the purpose of VAT, a Designated Zone will be treated as being outside the state and any supplies between Designated Zones will not attract VAT at 5%.
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