VAT in Oman’s Special Economic Zones and Free Zones

For Oman VAT purposes, Free Zones and Special Economic Zones are classified as `Special Zones’ and the VAT laws and regulations impose conditions that businesses must comply with accordingly. It is determined. By definition, a special zone is an area where the supply of goods and services from, into, or within the zone is treated as zero-rated, subject to conditions established by authorities and regulations. Masu.

VAT rate in free zones (special zones)
His VAT rate in free zones and special economic zones, so-called special zones, is taxed at zero rate. This applies to most deliveries to and from businesses operating within the zone. The following table shows the application of VAT on deliveries to and from Special Territories.

Form

Destination

Tax rate

Special zone

Special zone

Zero tax rate

Mainland

Special zone

Zero tax rate
4 4 44 Special Zone 4 4 44
GCC Countries

Zero Tax Rate

Special zones

Overseas (non-GCC)

Zero tax rate

Overseas/GCC countries

Designated zones

Zero tax rate

These include defined conditions and businesses that the zone itself must meet . It’s in the zone. All deliveries are free of shipping charges. Some types of consumables are subject to 5% VAT under certain conditions.

Learn more about VAT-free delivery in Oman. Deliveries to and from special regions are subject to an additional tax of 5%.

List of free zones and special economic zones that are considered special zones.
The following zones are currently considered special zones for VAT.

Duqm’s Special Economic Zone (SEZAD)
Salalah Free Zone(SFZ)
Sohar Free Zone
Al-Mazyunah Free Zone
Rules for the special zone, also referred to as a free zone
The following requirements must be met for a zone to be classified as a special zone.

The zone has to be a free zone or a special economic zone established in Oman in compliance with state legislation.

Procedures for keeping an eye on the flow of commodities and their supply into the zone should be in place.

The zone is overseen and controlled by a responsible operating body that has been granted permission under Omani laws.

Any other conditions determined by the authority.
Conditions for supply of goods at zero rate
If the following requirements are met, there will be no tax on the supply or transit of products into or within free zones:

It must be the case that the recipient or consumer is taxable.
To conduct business within the special zone, the client or recipient needs to be registered with and licensed by the operating and supervising body.
The recipient or consumer receives the items in order to use them for their activity within the
Special Zone.
Goods delivered may not be excluded from entitlement to input tax credit. In other words, these products must not be products for which input tax credits are restricted by law.
Conditions for providing services at zero rate.
The provision of services in special zones is taxed at zero rate if the following conditions are met:

Customer must be a taxable person.
Customer must be registered and licensed with the zone operator and supervisory authority.
Customer is receiving service as intended of the activity in the special zone.
Services linked to food and beverage delivery, restaurant and hotel services, cultural, artistic, athletic, educational, and recreational services should not be included in the services offered.

It is incorrect to categorize the services as exempt from input vat deduction requirements.

Frequently asked questions
What does free zone mean?
Free zones and special economic zones are referred to as “Special Zones” in Oman VAT law and regulations, and as such, they have specific requirements that firms must meet.

What is the purpose of free zone?
The main purpose of free trade areas is to eliminate trade barriers caused by high tariffs and complex customs regulations at ports, airports, and national borders.

How many free zones are there in Oman?
3 Free Zones. These industrial areas are located in important locations in Oman such as Lusail, Salalah, Sohar, Sur, Nizwa and Buraimi.

Is a free zone company exempt from his VAT?
For sales tax purposes, designated zones are treated as if they were outside the state, and all supplies between designated zones are not subject to the 5% sales tax. 

You can also Register for VAT Registration on our website:
https://thevatconsultant.com/

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