E-commerce subject to VAT in Oman
MUSCAT – New guidelines issued by the Oman Revenue Authority confirm the inclusion of the e-commerce sector, which is currently growing at an exponential rate, under the Value Added Tax (VAT) regulations of the country.
Therefore, a wide variety of goods and services supplied through electronic means, such as websites, electronic platforms, social media stores and networking sites and other electronic applications, are now subject to the VAT framework. from Oman.
Oman’s e-commerce market, valued at $2.19 billion in 2020, is expected to reach $6.52 billion by 2026, registering a CAGR of over 20% by 2026, according to Shibuya Data Count, specialist market research based in Japan. The sector has experienced robust growth during the pandemic phase and is expected to grow dramatically thanks to the country’s digital transformation, the rollout of 5G telecommunications services, the rapid adoption of digital payment options and the emergence of thriving online marketplaces.
The recent tax administration guide on the application of VAT to e-commerce – also known as electronically supplied goods and services – obliges suppliers who engage in e-commerce activities but do not have of residence in the Sultanate of Oman, to register for VAT if they are required by tax law to collect the VAT due on their deliveries to customers in the country.
In addition, given that the application of VAT depends on the place of delivery, the recipient customer and the nature of the goods, the tax authorities have specified that the place of delivery is “where the tax is imposed on the goods at the end of the supply chain”. – a key consideration, especially when goods move between two countries.
Taxable suppliers who are registered or mandated to register for VAT must determine the appropriate rate of tax on goods delivered into the Sultanate of Oman. While the standard rate of 5 percent is levied on most goods, the zero rate tax applies to certain types of goods, such as foodstuffs, drugs and certain medical equipment. In some limited cases, goods can be “exempt” from VAT, although such exemptions do not apply to goods supplied through e-commerce, according to tax experts.
It is important to note that a variety of digital services also fall under Oman’s VAT framework. This category includes the provision of digitized products such as software, website and webpage hosting services; digitized content of books and electronic publications, subscriptions to online newspapers, magazines, online news, weather reports, etc. ; access or download music, jingles and ringtones; accessing or downloading films and video games, distance education services; provision of advertising space on the Internet; and live broadcasts via the Net.
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