Import and export under Oman VAT

What is an import of goods in Oman?

An import of goods takes place when goods enter the Sultanate from outside the GCC region in any way (by air, sea, or land). The goods will be considered imported if they have been moved into Oman following the provisions of the Common Customs Law.

For example, if a British furniture company has a branch in the Sultanate and wants to move goods from their head office in Britain to this branch, then the goods transfer will be considered an import, as the goods are being moved from outside the GCC.

Place of supply for an import 

The place of supply of imported goods is in the Sultanate if:

1. The First Port of Entry of the goods is the Sultanate. This means that the goods arrive in the Sultanate directly from their origin, without passing through any other GCC state or other country.For example, if the goods arrive in the Sultanate from Singapore without stopping in any other country on the way, then the place of supply for the import will be Oman.

2. The goods are placed under customs duty suspension per Common Customs Law and released for import in Oman.
   
   Let us assume that there are some goods imported from Australia to Oman. On arrival, the goods will have to go through the customs transit regime to be transported to the Kingdom of Saudi Arabia. In this case, the import will not be a part of the VAT jurisdiction of the Sultanate, as the goods will be released from customs duty suspension only after they leave Oman.

For services imported to Oman, the place of residence of the customer will be the place of supply. Let us assume that you had purchased a television from Singapore and  you need to bring in people from Singapore to fix some hardware problems. In this case, the place of supply will be your place of residence within Oman.

Due date for paying VAT on import

Generally, importers are expected to pay VAT at the time of import of goods. The VAT is collected by the customs authority on behalf of the Oman tax authority. All

Tax will be due on imports in the Sultanate of Oman when the goods arrive at the First Port of Entry, as per the Common Customs law. Payment of tax will be suspended on imported goods placed under customs duty suspension. If the goods are moved from customs duty suspension for Oman's market, then they will be treated as an import and both VAT and duty will be payable by the importer.

VAT on imported goods and services

For goods imported into the Sultanate, the standard VAT rate applicable will be 5%. However, importers do not need to pay VAT on zero-rated (meaning that 0% VAT will be applicable) and exempted goods (meaning that VAT will not be applicable at all). 

Imported goods which will be exempt from tax include:

1. Goods for diplomatic and consular bodies and international organisations

2. Goods for the armed forces and internal security forces, like weapons, military equipment, and their parts

3. Personal and used household appliances or gifts purchased by citizens living outside GCC or foreigners settling in the country for the first time

4. Supplies imported by non-profit organisations

5. Returned goods

6. Baggage and gift items brought by travelers to the Sultanate, and requirements of people with special needs

Supplies which are made inside the GCC are considered imports, but are zero-rated. This includes specified foods; medicines and medical equipment; gold, silver and platinum for investments; supplies for international or inter-GCC transportation; rescue and assistance planes and boats; and crude oil, oil derivatives, and natural gas.

For services, the customer or the recipient in Oman will have to pay VAT under the reverse charge mechanism by accounting for their output VAT.

If the services are provided to a customer or recipient in another GCC state, the same rules will be followed until the two states recognise each other as VAT implementing states.  

What is an export of goods in Oman?

When goods are moved from the Sultanate to any other place outside the GCC region, then the movement of goods will be called an export.

For example, when an electronics company in the Sultanate wants to export a television to Australia, then the movement of goods will be called an export, because it is taking place outside the GCC region.

Place of supply for an export

For determining the place of supply, exports can be broadly classified into two categories:

1. Export from Oman to non-GCC countries

2. Export from Oman to GCC countries

Export from Oman to non-GCC countries

When goods are moved from Oman to non-GCC countries, then the place of supply is Oman.

In the case of services, if a business is providing services from Oman to a customer in a non-GCC country, then Oman is the place of supply, because it is the place of residence of the taxable supplier.

However, special place of supply rules will be applicable for the following services:

Export from Oman to GCC countries

When the goods are exported from Oman to the GCC member states, the place of supply will be determined using the following rules:

1. When Oman is the starting point of the transportation or dispatch of the goods, then the place of supply is Oman.
2. When the transportation or dispatch starts from Oman, the place of supply is the location of the goods.
3. When services are exported from Oman and the customer is non- taxable, the place of residence of the supplier is the place of supply.
4. If the customer is taxable and is in one of the GCC member states, then the place of supply is the customer's place of residence.

VAT on exported goods and services

All supplies exported outside the GCC will be subject to tax at zero rate. This includes supplies such as dairy products, water, tea, crude oil, oil derivatives, medical supplies, and more.

Goods and services which are marked tax exempt in the Sultanate will be considered zero-rated supplies when exported outside the GCC region.

Some supplies are VAT-exempt, including financial services, healthcare, local passenger transport, and renting or resale of residential property.

Value of supply for goods temporarily exported outside the GCC countries

When goods are temporarily exported outside the GCC countries to complete their manufacturing process or repair, the taxable value is calculated when the goods are imported again into the GCC states. This value is equal to the incremental difference in the value of the goods.

For example, let us assume that a business in Oman sells televisions. Some defective televisions have been exported to Singapore for repair and then brought into Oman again.When the goods were imported for the first time, the value of import was 50,000 OMR, and after repair, the import cost increased to 60,000 OMR. The taxable value when they are imported the second time is the incremental difference in the value of goods: 10,000 OMR.

Conclusion

Transactions involving imports and exports play a key role in your business, so it is important that you understand the import and export rules set up by the Sultanate. Make sure that you determine the right place of supply for your goods and services, know how to calculate the value of VAT for each transaction, and check what can be recovered via reverse charge. This will help you keep your business compliant at all times.