The Public Authority for Special Economic Zones and Free Zones (OPAZ) announced that the Special Economic Zone at Duqm (SEZAD) and the free zones in Salalah, Sohar, and Al Mazunah are classified as (Special Zones) in accordance with the provisions of Article (102) of the Executive Regulations of the Value Added Tax (VAT), issued in the Decision No (53/2021). This announcement comes to post the coordination with the Tax Authority in regards to the implementation of VAT. In accordance with the conditions specified in Article (103) of the Regulations. All these special zones are subject to (0%) tax.
OPAZ declared today in a press release that the provisions of Article (54) of the VAT Law (Royal Decree No (121/2020) stipulates that 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 the VAT Executive Regulations.
Therefore, OPAZ calls on all companies, enterprises, businesses, and establishments operating in these zones to comply with the conditions stipulated in the VAT Executive Regulations, until the Tax Authority of Oman publishes detailed procedures for the purposes of applying VAT at a rate of zero percent in the Special Zones. These conditions include VAT Registration and VAT Administration.
In accordance with the Executive Regulations of the Value Added Tax (VAT), companies, establishments, enterprises, or persons working in the Special Zone (whether SEZAD, Free Zones) and whose entire supplies of goods or services are taxable at the zero rates, must apply to the Tax Authority for authorization and VAT registration.
Applications may be submitted online in the portal of the Tax Authority through the following link: https://www.taxoman.gov.om/. The VAT registrant must attach to the VAT registration application 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.
Supplying or transporting goods
For supplying or transporting goods to or within these Special Zones, Article (103) of the VAT Executive Regulations stipulates:
- That the customer or the recipient is subject to Tax.
- That 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.
- That the customer or the recipient has received the goods for the purposes of the activity within the Special Zone.
- The goods shall not be among the goods excluded from the right of deduction in accordance with the provisions of Article (56) of the Executive Regulations.
Article (103) of the Executive Regulations stressed that documents proving the transfer of goods to, within or between the Special Zones must be kept; to 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.
Supply of services
With regard to the supply of services to a Special Zone, Article (107) of the Executive Regulations requires:
- That the customer is registered for VAT in accordance with the VAT registration rules above.
- The client must be a person licensed and registered by the Authority operating and supervising the Special Zone.
- That the client has 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, educational, and entertainment services provided for in Clause (5) of Article (24) of the VAT Law.
- These services should not be exempt from VAT in accordance with the provisions of Article (47) of the VAT Law.
The Public Authority for Special Economic Zones and Free Zones (OPAZ) urges all establishments and companies operating in the Special Economic Zone at Duqm and the free zones to coordinate directly with the Tax Authority in case of any inquiries related to the implementation of the Value Added Tax (VAT).