Oman’s Oil and Gas sector is one of the key drivers for country’s economic development. According to the Omani 2022 Budget, oil and gas industry accounts for 68% of the Sultanate’s earnings. Oil, oil derivatives, and natural gas are all entitled to a zero-rated VAT in accordance to the Omani VAT Law.
On January 6, 2022, the Omani Taxation Authority (TA) issued a VAT Guide, written in English, that clarifies the implementation of VAT legislation in the Oil and Gas business. The Guide covers critical practical issues and provides further interpretation and guidance for the Sultanate’s oil and gas industry.
GUIDE’S OVERVIEW
It is important to note that the guide is not a substitute for the VAT Law or its executive regulations. By providing a detailed interpretation of Article 93 of the Omani VAT Executive Regulations (*ER), the tax authorities clarify the conditions for zero rating supplies within the oil and gas sector. Additional requirements for applying the zero rating in the upstream and midstream transactions were also specified. For upstream/midstream work, contractors must provide their Joint Suppliers Registration System (JSRS) certification as evidence of ‘MEM license’ for VAT registration. As a result, firms must evaluate their VAT status considering the clarifications to ensure compliance.
Source: tms.taxoman.gov.om