Everything About VAT in Oman in 2025 – Full Guide

Why Should VAT in Oman Be Taken Seriously? As part of Oman’s broader fiscal reform strategy and to reduce its historical reliance on oil revenues, the Value Added Tax (VAT) was officially implemented on April 16, 2021. The move was enacted under Royal Decree No. 121/2020, and by 2025, the VAT system—with a stable standard rate of 5%—has been firmly established as a new pillar of government revenue.

The combination of a fixed 5% rate, broad applicability, and flexible policies regarding exemptions and zero-rating has made VAT not only an effective tool for generating sustainable government income but also a platform for enhancing economic infrastructure and tax equity.

Compared to other Gulf Cooperation Council (GCC) countries, Oman’s VAT regime remains highly competitive. While Saudi Arabia applies a 15% rate and Bahrain 10%, Oman maintains its 5% rate, making it a more attractive destination for foreign investors and startups.

Estimates indicate that by 2025, VAT will contribute between 1.5% and 2% of Oman’s Gross Domestic Product (GDP). This contribution plays a key role in public budgeting, debt servicing, infrastructure investment, and the nation’s transition toward a diversified, non-oil economy.

Beyond its financial role, VAT implementation has improved financial transparency, enhanced accounting discipline, and boosted the technical capacity of the private sector. Today, businesses in Oman must increasingly comply with international accounting standards, electronic reporting requirements, and strict tax regulations.

This article provides a step-by-step, comprehensive, and up-to-date analysis of VAT in Oman for 2025 — covering everything from core concepts, tax rates, registration, and exemptions, to violations, penalties, refund procedures, and the latest legal updates such as the implementation of Pillar Two and the postponement of mandatory B2B e-invoicing.

Legal Framework and Philosophy Behind VAT Implementation in Oman

The implementation of Value Added Tax (VAT) in Oman has not merely been a domestic fiscal reform—it is part of a broader, multilayered roadmap to modernize the economic structure and establish a transparent, revenue-generating, and digital-driven government. Introduced under Royal Decree No. 121/2020, Oman’s VAT system was developed in line with the Unified GCC VAT Agreement and has been directly supervised and implemented by the Oman Tax Authority (OTA) since 2021.

Over the years, Oman’s VAT regulations have undergone several key updates, including:

• Decision No. 521/2023, which expanded VAT refund eligibility for charitable organizations
• Decision No. 81/2025, which extended VAT refunds to the armed forces and security entities
• The Pillar Two global minimum tax, enacted via Royal Decree No. 70/2024, designed to apply a minimum effective tax on multinational enterprises

These actions reflect not only the dynamic and adaptive nature of Oman’s VAT framework but also the legislator’s commitment to continuous modernization and alignment with international standards.

The framework is built on the following strategic objectives:

• Diversifying government revenue and reducing reliance on hydrocarbon exports
• Enhancing financial transparency and minimizing tax evasion
• Accelerating digitalization through the OTA e-portal and e-invoicing initiatives
• Coordinating with GCC member states to facilitate cross-border trade
• Aligning with IMF recommendations for fiscal restructuring and economic sustainability

Through this system, Oman presents itself as a developing nation with a modern, competitive tax policy, increasingly recognized and supported by institutions such as the IMF, World Bank, and international tax consultants.

Additionally, since 2023, the Oman Tax Authority has launched full digital transformation of tax interactions. The OTA platform now handles VAT registration, return submissions, refund requests, and penalty payments electronically. The phased implementation of mandatory B2B e-invoicing, set to become compulsory in 2025, marks a significant step toward enhancing accuracy, transparency, and reducing fraud.

In essence, VAT in Oman is not merely a revenue tool; it is a strategic instrument for economic stability, public finance reform, and the creation of a transparent and business-friendly environment. This framework supports Oman’s vision to become a reliable economic hub in the Gulf region, in line with its regional peers.

VAT Rates and Scope in Oman (2025)

As of 2025, Value Added Tax (VAT) rates in Oman remain structured across three main categories: the standard rate (5%), the zero rate (0%), and exempt supplies. While the system is relatively simple, it is strategically designed to ensure wide economic coverage, social balance, and operational efficiency.

In VAT terminology, the word “supply” refers to the provision of goods or services. In Oman, supplies may fall under standard-rated, zero-rated, or exempt categories. Understanding the difference between zero-rated and exempt supplies is especially critical for businesses:

Important Note for Businesses:

If your business operates in an exempt sector (e.g., educational institutions, clinics, or charities):

• You cannot charge VAT to customers.
• And you cannot recover VAT paid on related purchases (e.g., advertising, IT services, consumables).

This has a direct impact on pricing models, profitability, and financial planning.
Incorrectly charging VAT or claiming ineligible input VAT may lead to denial of credit, penalties, or tax audits.

Standard VAT Rate: 5%

The 5% standard rate applies to most goods and services supplied in Oman and is one of the lowest VAT rates globally and within the GCC. For comparison:

• Saudi Arabia: 15%
• Bahrain: 10%
• UAE: 5%
• Oman: 5% (unchanged in 2025)

For businesses operating in Oman, this rate stability provides a predictable, transparent pricing environment and a competitive edge.

Zero-Rated Supplies: A Strategic Opportunity for Input VAT Recovery

Certain goods and services are subject to VAT but at a 0% rate. In such cases, businesses can recover the input VAT paid on related purchases while not passing any VAT cost to the customer.

Key examples of zero-rated supplies:

• Basic food items
• Medicines and medical equipment
• Exported goods and services
• International transport (air, sea, land)
• Digital services to non-residents
• International tour packages and outbound flight tickets
• Supplies to free zones (under specific conditions)

For Exporters and Digital Service Providers:

If you export goods or provide digital services to international markets:

• You do not charge VAT to your foreign customers
• But you can recover VAT paid on your inputs (e.g., marketing, goods, services)

✅ This supports cash flow and enhances profitability.

Real example:
An Omani company exports natural beverages to Kuwait:

• Sales VAT: 0%
• Input VAT on bottles, packaging, logistics, marketing: fully refundable

VAT-Exempt Supplies: Less Responsibility, but Less Benefit

Some sectors—such as education, healthcare, interest-based finance, and residential real estate—are fully exempt from VAT.

Common VAT-exempt sectors:

• Medical services (clinics, hospitals, pharmacies)
• Educational services (schools, universities, training centers)
• Sale and lease of residential properties
• Fee-free financial services (deposits, loans, interest)
• Domestic public transportation
• Sale of undeveloped land

Key Distinction from Zero-Rating:

• Zero-rated: You can reclaim input VAT
• Exempt: You neither charge VAT nor reclaim input VAT

For Businesses:

If your company operates in an exempt field (e.g., education or housing rental):

• You must not charge VAT to customers
• But you also cannot reclaim VAT on purchases (e.g., supplies, advertising, accounting services)

This limits your ability to recover costs, requiring smart cost management and adjusted pricing strategies.

Real example:
An English language school in Muscat:

• Tuition VAT rate: Exempt
• Input VAT on advertising or student management software: non-refundable
• Implication: Strict cost control is essential since no VAT credit applies

Oman’s Strategic Approach: Balancing Social Fairness with Export Competitiveness

Oman’s three-tier VAT system is not only technically simple and administratively feasible—it is also strategically aligned with key policy goals:

• Domestic consumption → 5% standard rate to fund government revenue
• Essential services → zero-rated or exempt to reduce financial pressure
• Exports, tourism, international trade → zero-rated to promote global integration

This structure is in line with international best practices, as recommended by institutions like the International Monetary Fund (IMF) and the World Bank, particularly for transitioning economies.

VAT Registration in Oman (2025)

Who Needs to Register and How? In Oman’s VAT framework, registration for Value Added Tax (VAT) is determined by a business’s taxable turnover, type of activity, and residency status (resident or non-resident). The registration process is fully digital, streamlined, and trackable via the official portal of the Oman Tax Authority (OTA).

VAT Registration Thresholds in Oman

These thresholds are assessed based on the past 12 months or the next 30 days’ forecasted turnover.

Who Must Register?

1. Resident Businesses in Oman
   Any business exceeding OMR 38,500 in taxable turnover is obliged to register for VAT.
2. Small and Medium Enterprises (SMEs)
   If turnover falls within the voluntary threshold, registration allows for input VAT recovery and improves profit margins.
3. Non-Resident / Foreign Businesses
   Regardless of turnover, if they supply VAT-applicable goods or services in Oman (e.g., digital services, consulting, SaaS), they must register.

Failure to register on time can result in severe penalties and loss of tax credits.

Step-by-Step VAT Registration Process via the OTA Portal

1. Access the portal: https://tms.taxoman.gov.om
2. Select “VAT Registration”
3. Enter key details: Commercial Registration (CR), business activity, fiscal year, taxable turnover
4. Upload required documents:
   • National ID or passport
   • Trade license
   • Financial statements
   • Bank account details & appointed tax representative
5. Submit the application and receive an official VAT certificate

Processing Time: Usually less than 7 working days

Pro Tip for Businesses: Voluntary Registration Based on Expenses

Some businesses may not yet generate substantial income but incur significant VAT-bearing costs, such as:

• Digital marketing
• Consulting services
• Website development
• Equipment imports

Under executive regulations, if your VAT-taxable expenses exceed OMR 19,250, you can and should register voluntarily to recover input VAT.

✅ Ideal for:
Startups, online stores, design agencies, tech firms, or new market entrants with high upfront costs.

Group VAT Registration: A Strategic Option for Holdings and Large Companies

In Oman, businesses under a holding structure (shared ownership) may apply for Group VAT Registration. Under this setup:

• The parent company and its subsidiaries share a single VAT number
• Intra-group transactions are VAT-neutral
• Accounting is simplified and tax processes are centralized

Note: All members of the VAT group must be legally registered in Oman and have verified direct or indirect ownership links.

Penalties for Non-Registration

VAT Returns and Compliance Requirements in Oman (2025)

Reporting, Payment, and Record-Keeping Obligations for Registered Businesses

Once registered for Value Added Tax (VAT), businesses in Oman must enter a critical phase of ongoing compliance. This includes submitting returns, paying due VAT, and maintaining accurate financial records.

These obligations are the foundation of a transparent relationship with the Tax Authority, and essential for input VAT recovery, penalty avoidance, and maintaining tax credibility.

1. VAT Return Structure: Accurate Output vs. Input Calculation

For every tax period, businesses must calculate the difference between:

• Output VAT (collected from customers)
• Input VAT (paid to suppliers)

Simple formula:
Payable VAT = Output VAT – Recoverable Input VAT

If input VAT exceeds output VAT, the excess can either be carried forward to the next period or claimed as a refund.

2. VAT Return Periods: Quarterly, Regular, and Timely

All registered businesses are required to file VAT returns quarterly through the OTA portal.

Tip: Many businesses mistakenly assume that filing a return and making payment are the same process — they are not. Both are mandatory and must be completed separately.

3. Payment of VAT Liability: Timely, Online, and Traceable

VAT due must be paid within the same 30-day window after return submission. Late payments incur monthly delay penalties.

Even if the return is filed but payment is not made, late payment penalties still apply.

4. Record-Keeping: The Backbone of VAT Compliance

All businesses must retain VAT-related documentation for at least 10 years, or 15 years in the real estate sector.

✅ Digital record-keeping is allowed, but documents must be available in Arabic upon official request.

Maintaining records in English is acceptable, but Arabic versions must be provided in case of audit or inquiry.

5. Consequences of Non-Compliance: Penalties, Audits, and Loss of VAT Credit

Failure to comply with VAT obligations can lead to serious consequences:

Compliance Summary for Businesses

If you are VAT-registered in Oman, you must:

✅ Submit accurate quarterly returns
✅ Pay VAT within 30 days of the return period
✅ Keep records for a minimum of 10 years (15 for real estate)
✅ Report any changes in address, activities, tax representative, or bank account
✅ Ensure full accuracy in your returns – as VAT audits in Oman are becoming more rigorous

ERP & Accounting Tools for VAT Management in Oman

For businesses with complex operations, using VAT-compliant ERP or accounting software is essential.

Popular solutions include:

• Tally ERP
• Zoho Books
• Oracle NetSuite
• SAP Business One
• QuickBooks Global Edition

These tools help businesses to:

✅ Automate VAT calculations (input/output)
✅ Prepare returns in OTA-approved formats
✅ Store financial records in line with 10-year retention rules
✅ Minimize human error and reduce audit risk

Choosing the right ERP system can significantly lower compliance costs and simplify reporting.

Importance of POS System Integration for VAT (Retail, Hospitality, F&B)

In sectors like retail chains, restaurants, cafés, and hotels, POS systems (Point of Sale) play a crucial role. Your POS should:

• Automatically apply the 5% VAT rate on invoices
• Accurately categorize VAT and input data
• Generate periodic reports for VAT return alignment

Without these features:

• Your VAT return may be rejected
• You risk mismatched audits, penalties, or loss of VAT credit

Solution:
Invest in a VAT-compliant POS system. It’s a critical infrastructure decision for all B2C businesses in Oman.

Sector-Specific VAT Treatment in Oman (2025)

From real estate to tourism and e-commerce — different rules, different impacts

While Oman applies a standard VAT rate of 5%, the implementation of VAT across various sectors is tailored to reflect sector-specific rules. This flexible design allows the government to generate revenue while supporting sensitive sectors and promoting exports.

1. Real Estate Sector

Tip for developers:
If you operate in commercial real estate development, you can recover input VAT on construction expenses.
In residential real estate, however, input VAT cannot be reclaimed, which must be factored into the financial model.

2. Financial Services Sector

Oman distinguishes between interest-based and fee-based financial services:

Key Insight:
Financial institutions must segregate income streams, as some are VAT-exempt while others are taxable.

3. Tourism and Hospitality

Note for travel agencies and tour operators:
If services are provided to foreign visitors, no VAT is charged to them, but input VAT is recoverable — provided that supporting documentation is in place.

4. E-Commerce and Digital Services

Note:
International companies (e.g., SaaS or content platforms) must register for VAT in Oman, even without physical presence.

5. Free Zones and Special Economic Areas

To qualify for zero-rating in free zones, the following must be ensured:

• The buyer holds a valid license within the free zone
• Goods or services are for use within the zone
• Documentation of goods movement must be properly maintained

6. Education – On-Site vs. Digital

Oman treats education as a sensitive sector with varying VAT treatment:

EdTech Operators:
If your platform is based outside Oman but sells digital education to Omani users, VAT registration is mandatory.
This includes SaaS platforms, subscription-based courses, remote learning tools, and webinars.

7. Documentation Requirements for Zero-Rated Exports and Tourism

According to Omani VAT law, zero-rating is only valid when proper documentation is provided.

Without sufficient documentation, the Tax Authority may disallow input VAT and demand output VAT payment.

✅ Recommendation for businesses:
Ensure your invoicing system, CRM, and document archiving are built to instantly produce these records in case of an audit.

VAT Violations and Penalties in Oman (2025)

Every mistake has a cost — Full list of fines, payment procedures, and prevention strategies

The Omani VAT Law establishes a strict compliance system to deter fraud and ensure tax transparency. With the expansion of electronic monitoring and the rollout of digital tax systems, audits and enforcement actions have intensified in 2025.

Key VAT Offenses and Applicable Penalties

Note: Penalties may be both financial and criminal, especially in the case of intentional or repeated violations.

Paying VAT Penalties Through the eTax Portal

VAT penalties are payable electronically via the OTA platform:

1. Visit the eTax Portal: https://tms.taxoman.gov.om
2. Navigate to the “Penalties” section
3. View the fine amount and violation details
4. Pay using one of the following methods:
   • Omani bank card
   • Direct bank transfer
5. Download and save your payment receipt

If the violation is recorded in error, businesses may file a formal objection along with supporting documents.

Preventive Checklist: Avoid VAT Penalties

✅ Set up a VAT calendar and track every 30-day deadline
✅ Issue standard VAT invoices for every taxable supply
✅ Use approved accounting software for automated VAT calculations
✅ Immediately update the Tax Authority on any changes in address, business name, activity, or bank details
✅ Perform dual checks on every VAT return (content and system)
✅ Archive all documents for zero-rated, exempt, and export transactions
✅ When in doubt, consult a tax advisor — penalties cost more than consultation fees!

If the Oman Tax Authority (OTA) conducts a VAT audit and finds significant errors in previous returns, the following may occur:

Impact of Tax Audits on Penalties

• Retroactive penalties on previous tax periods
• Reversal of refunded input VAT
• Launch of formal investigations into tax evasion

Therefore, continuous compliance, robust recordkeeping, and reliable accounting systems are the best defense against VAT audits.

Voluntary Disclosure Can Reduce or Eliminate Penalties

Under OTA’s enforcement policies, if a business identifies and voluntarily reports a VAT error before it is discovered by the authorities, it may benefit from:

• Reduced fines
• Or complete waiver of penalties

Especially applicable for:

• Amending incorrect VAT returns
• Fixing wrong invoices
• Late VAT registration

✅ Pro tip for finance managers:
If you discover an error, be proactive. Self-disclosure and correction not only reduce financial risk but also preserve your business’s long-term credibility.

VAT Refunds and Input Tax Credit in Oman (2025)

How can businesses reclaim VAT paid? Opportunities, conditions, and procedures

Under Oman’s VAT regime, registered businesses may request a refund of input VAT if the input VAT exceeds the output VAT collected. Alternatively, the excess may be carried forward to the next tax period.

This mechanism is a vital liquidity tool, especially during economic downturns or for capital-intensive projects.

Definition: Input Tax Credit (ITC)

Input VAT refers to the tax a business pays on purchases of goods, services, or imports related to taxable activities.
If input VAT exceeds output VAT:

✅ It can be carried forward to the next return period
✅ Or, if eligible, a cash refund may be requested

General Conditions for VAT Refund Eligibility

Without meeting these conditions, the input VAT is only carried forward, and no refund is issued.

Special Refund Cases (2025)

According to the latest updates, Oman Tax Authority allows VAT refunds for the following six special cases:

1. Input VAT paid by non-taxable persons during imports
2. Overpaid VAT during import transactions
3. Purchases made by registered charitable organizations
4. Purchases by the armed forces and security entities (per Decision 81/2025)
5. Imports intended for re-export
6. Purchases by international or diplomatic organizations

Refund Application Process via the OTA Portal

1. Log in to the OTA Tax Portal eTax: https://tms.taxoman.gov.om
2. Select “VAT Refund Request“
3. Complete the online form (amount, period, business type)
4. Upload:
   • VAT-compliant invoices
   • Import certificates
   • Supporting financial records
5. Submit the request to the Tax Authority
6. Review within 30 working days
7. If approved, payment is issued within 15 working days

Status tracking and objection filing (in case of rejection) are available through the portal.

Key Tips for Successful VAT Refunds

✅ Ensure all invoices are standardized, dated, and include a valid Tax Identification Number (TIN)
✅ Goods/services must be directly related to taxable business activity
❌ Personal expenses, luxury items, or undocumented costs are non-recoverable

In mixed-use services (exempt + taxable), VAT can only be claimed proportionally based on the taxable use (apportionment principle).

Pro Tip: Managing Input VAT for Capital-Intensive Projects

Businesses in construction, industrial investment, or heavy equipment procurement often face high input VAT in the early stages and low output VAT.
Smart management of VAT credits and consistent refund requests can improve cash flow and reduce financial strain.

Refund vs. Carry Forward: Know the Difference

Many businesses misunderstand the two settlement options for VAT excess:

The Tax Authority often prefers carry-forward unless:

• The business is export-focused
• Documentation is complete
• The refund amount exceeds the internal threshold

✅ If your business requires a cash refund due to liquidity or project conditions, clearly state in your request:

“We request a cash refund of the excess VAT, not a credit carry forward.”
Attach strong supporting documents and justification.

Timelines & Minimum Threshold

• Refund requests should be submitted quarterly
• Minimum refundable amount: OMR 15
• 30 days for processing, 15 days for payment

VAT Refunds for Foreign Tourists: Boosting Retail and Tourism

Under Decision No. 81/2025, foreign tourists are now eligible for VAT refunds in Oman. This aims to enhance the shopping experience for international visitors and stimulate the tourism economy.

Conditions for Tourist VAT Refunds:

Tourists can claim VAT refunds upon exiting Oman if:

• The purchase involves VAT-taxable goods
• A valid VAT invoice is issued
• The following documents are provided:

Example:
Anna, a tourist from Germany, makes a purchase of OMR 100 with OMR 5 in VAT. At Muscat Airport, she submits her documents at the tax refund counter and receives a refund.

Objectives of the Tourist VAT Refund Policy

• Encourage visitor spending
• Enhance travel experiences in Oman
• Align with international practices (e.g., UAE, France, Turkey)
• Attract foreign currency and support the retail sector

Other Entities Eligible for Special VAT Refunds in Oman (2025)

• Foreign tourists
• Diplomatic missions
• Registered charities
• Overpaid VAT on imports
• Re-exported goods
• Oman’s armed forces and security (new addition in 2025)

These policies aim to ensure transaction transparency, build global trust, and draw indirect foreign investment through external consumption.

Key VAT Reforms and Legal Updates in Oman (2025)

From delayed e-invoicing to the implementation of global minimum tax

In 2025, Oman’s tax system witnessed several strategic developments that have either directly or indirectly impacted VAT operations. Below is a breakdown of the most important changes:

1. Decision 81/2025: Expanded VAT Refund Eligibility

As covered earlier, Oman’s Tax Authority has increased the number of eligible VAT refund groups from four to six. The latest addition is the Omani Armed Forces and Security Agencies. The full list now includes:

• Foreign tourists
• Registered charitable organizations
• Diplomatic missions
• Re-exported goods
• Overpaid import VAT
• Omani military and security sectors (new in 2025)

✅ This move supports transparent financial flows, indirect investment, and priority sectors in Oman’s economy.

2. Mandatory B2B E-Invoicing Delayed to 2025

The mandatory electronic invoicing (e-Invoicing) scheme, initially scheduled for October 2024, has been postponed to the second half of 2025 due to incomplete infrastructure and pending release of technical guidelines.

Action for Businesses:
Start updating ERP/accounting systems to ensure OTA-compliant e-invoice generation by 2025.

3. Pillar Two Global Minimum Tax: Indirect Impacts on VAT

Under Royal Decree 70/2024, Oman began implementing the OECD Pillar Two framework as of January 1, 2025. This affects multinational enterprises (MNEs) with annual global revenue exceeding EUR 750 million.

Key components:

• DMTT: Domestic Minimum Top-Up Tax (15%)
• IIR: Income Inclusion Rule

While this law does not directly affect VAT, it could:

• Prompt MNEs to restructure their VAT compliance strategy
• Require tighter financial reporting standards
• Increase scrutiny of cross-border invoices and VAT documentation

4. Free Zone Reform – Royal Decree 38/2025

The newly issued Royal Decree 38/2025 introduces a revised Free Zone and Special Economic Area Law, affecting how VAT zero-rating is applied:

• Only companies with a registered and licensed activity inside the zone may qualify for VAT zero-rating
• Some services (e.g., restaurants, culture, education) are excluded from VAT exemptions
• Businesses must maintain detailed documentation for client registration, supply usage, and goods movement

✅ Key outcome: Strengthened controls and precise application of VAT policies in free zones

Broad Impact of These Reforms:

• Acceleration of tax digitalization → ERP systems must align with OTA
• Tighter documentation for exports, free zone activities, and special sectors
• Expansion of eligible refund categories
• Harmonization with international VAT and corporate tax systems

Role of OTA Guides and Expert Sessions in Interpreting Reforms

To help businesses adapt, the Oman Tax Authority (OTA) provides:

• Official VAT guidelines
• Workshops and training sessions
• Expert Q&A events for clarification

Key resources include:

• B2B E-Invoicing Implementation Guide
• FAQs on Zero-Rating and Free Zones
• Tourist and Special Entity VAT Refund Processes
• Practical Analysis of Pillar Two Provisions
• VAT Reform Timeline (2025)

🔗 Access these resources on: https://tms.taxoman.gov.om

Pro Tip:

✅ Businesses that actively attend OTA sessions and study official guides:

• Perform better during audits
• Incur fewer penalties
• Navigate compliance changes more smoothly

The Impact of Value Added Tax (VAT) on Oman’s Economy, Consumers, and SMEs (2025)

Is VAT reshaping Oman’s economic landscape?

1. VAT’s Role in Diversifying National Revenue

Since its implementation in 2021, VAT has become a stable and predictable source of government revenue in Oman.
According to estimates, VAT now contributes approximately 1.5% to 2% of Oman’s Gross Domestic Product (GDP).

The government’s primary goal:

• Reduce dependence on oil revenues
• Fund infrastructure, public services, and economic programs
• Align with the goals of Oman Vision 2040

2. VAT’s Impact on Consumer Behavior and Cost of Living

• Slight price increases: In some goods and services, the 5% VAT has led to moderate price hikes.
• Reduced purchasing power for low-income households: Although essential items are zero-rated, VAT still exerts noticeable pressure on non-essential items.
• Greater consumer awareness: Shoppers are now examining VAT invoices, comparing spending habits, and even seeking VAT refunds (e.g., tourists).

✅ The government has attempted to mitigate negative effects through zero-rating of essentials, transportation, healthcare, and education.

3. VAT’s Impact on Small and Medium Enterprises (SMEs)

Government Support for SMEs:

• Voluntary registration for businesses with turnover exceeding OMR 19,250
• Training programs and step-by-step guidance via the OTA portal
• Exemptions and special facilities for emerging businesses

Analytical Conclusion:

• VAT implementation in Oman has matured by 2025
• Both businesses and consumers are increasingly adapting
• Smart reforms, tourist refund mechanisms, and digital advancements have turned VAT into a modern and effective fiscal instrument

The future of VAT in Oman is tightly linked to:

• ERP integration
• E-invoicing adoption
• Harmonization with the global digital economy

For the latest laws and guidelines on VAT in Oman, refer to:

• Oman Tax Authority Official VAT Portal
• Royal Decree 121/2020 – VAT Base Law
• Decision 81/2025, Decision 521/2023
• Royal Decrees 38/2025 and 70/2024