Oman: Transportation of Goods in Special Zones to be Zero-rated for VAT Purposes

Oman Daily Observer, 27 April 2021: Oman’s Public Authority for Special Economic Zones and Free Zones has announced the Special Economic Zone at Duqm and the free zones in Salalah, Sohar and Al Mazunah are classified as Special Zones in line with Article 102 of Oman Decision No. 53/2021 which issued the Implementing Regulations to Oman Sultani Decree No. 121/2020 (the VAT Law).

In line with the conditions specified in Article 103 of Oman Decision No. 53/2021 all these special zones will be zero-rated for VAT purposes.

Under Article 54 of Oman Sultani Decree No. 121/2020, supplies of goods or services to or from the Special Zones, or within them, may be zero-rated, following the conditions laid down in Articles of 101, 102, 103, 104, 105, 106 and 107 of Oman Decision No. 53/2021.

All companies, enterprises, businesses and establishments operating in these zones should comply with the conditions in the Implementing Regulations, until the Tax Authority publishes detailed procedures for applying VAT at zero percent in the Special Zones. These include VAT Registration and VAT Administration.

In line with the Implementing Regulations, companies, establishments, enterprises, or those working in Special Zones and whose entire supplies of goods or services are taxable at the zero rates, must apply to the Tax Authority for authorisation and VAT registration.

Applications may be submitted at https://www.taxoman.gov.om/. The applicant must attach a copy of the commercial registration certificate and a copy of the license certificate issued by the relevant Special Zone Authority for carrying out economic activity in the Zone to the application.

For supplying or transporting goods to or within these Special Zones, Article 103 of Oman Decision No. 53/2021 states the customer or the recipient is subject to tax and the customer or the recipient be licensed and registered by the operating and supervising authority of the Special Zone to conduct the activity within the Zone. Under the same provision, the customer or the recipient should receive the goods for the purposes of the activity within the Special Zone and the goods will not be among the goods excluded from the right of deduction in line with Article 56 of Oman Decision No. 53/3021.

Under Article 103 of Oman Decision No. 53/2021, documents proving the transfer of goods to, within or between the Special Zones must be kept so as they can be certified by the entity operating and supervising the Special Zone with regard to the supply of goods within the Zone. This also applies to documents issued by Oman Customs, with regard to the supply and transportation of goods to the Special Zone or from one Special Zone to another one.

In terms of the supply of services, the customer has to be registered for VAT in line with the registration rules and the client must be licensed and registered by the Authority operating and supervising the Special Zone. They must also have received services for the purposes of activity in the Special Zone. These services do not include restaurant and hotel services, food and beverage undertakings and cultural, artistic, sports, education and entertainment services provided for in Article 24(5) of Oman Sultani Decree No. 121/2020.

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