In Oman VAT, on all types of supplies, the standard rate of VAT will be levied. However, given the importance of certain types of supplies, the Oman VAT is provisioned to give special treatment to a few notified supplies. This special provision is known as zero-rated supplies. In this blog, let’s understand what is zero-rated supplies and the type of supplies covered under them.
What are zero-rated supplies?
Zero-rated supplies refer to the taxable supply on which VAT is charged at a zero rate. As the name suggests, VAT will be charged at 0% on certain notified supplies. Guess you must be wondering why the definition says taxable while the rate is at '0' per cent.
The reason why zero-rated supplies are included under the taxable supplies bracket is to enable businesses to claim input VAT deduction . In simple words, you will be allowed to claim the VAT paid on the purchases though you will not be charging the VAT on your sale.
The only difference is that taxable supplies attract a standard rate of VAT at 5% while on zero-rated supplies, VAT is levied at 0%.
List of zero-rated supplies
Below is the list of supplies classified as zero-rated supplies
- Notified supply of food items.
- Supply of medicines and medical equipment as notified by the authorities.
- Supply of investment gold, silver, and platinum.
- Supplies of international and intra GCC transport of goods or passengers.
- Supply of services in connection with this transport.
- Supply of air, sea, and land means of transport that is designated for the transportation of passengers and goods for commercial purposes and the supply of Goods and Services related to transport.
- The supply of rescue planes, and rescue and assistance boats
- The supply of oil, oil derivatives, and natural gas
- Supplies made to outside the GCC territory as mentioned below:
- Export of goods.
- Supply of goods or services to or within one of the customs duty suspension cases mentioned in the Common Customs Law.
- Re-export of goods that have been temporarily imported to Oman for repair, refurbishment, conversion or processing, and services added to it.
- Supply of services by a taxable Supplier that has a place of residence in the Sultanate to a Customer that does not have a place of residence in the GCC States, barring few that is notified in the law.
- Supply of goods or services that are exempt from tax in the sultanate and that are supplied to outside of the GCC states.
- Supplies of goods and services from, to or within special economic zones
The above is the broad list of supplies that are classified as zero-rated supplies. It is important to note that zero-rated supplies come with the limits, conditions, and circumstances determined by the regulations and the authorities.
FAQs on zero-rated supplies
- What is Oman zero-rated VAT?
Zero-rated supplies refer to the taxable supply on which VAT is charged at a zero rate.
- Can I claim input VAT on zero-rated supplies?
You will be allowed to claim the VAT paid on the purchases though you will not be charging the VAT on your sale
- What items are zero-rated for VAT?
Exports, supplies within free zone ad certain notified supplies such as the supply of medicines and medical equipment, investment gold/silver/platinum etc
Watch Video on VAT Treatment on Zero Rated Supply Presented by CA Girish Chand
Read more on Oman VAT
