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Exempt supplies are non-taxable supplies that are exempted from VAT. In simple words, on the supply of goods or services which are notified as exempt, no VAT is levied. The important point that needs to be remembered here is that businesses will not be allowed to claim Input vat deduction on VAT paid on the purchases.
Al-Ameen LLP purchased raw materials worth 1,000 OMR with VAT 5% i.e.50 OMR. The raw materials are used to produce the finished product which is exempted from the VAT. Al-Ameen sold the finished products for 1,100 OMR.
In the above example, Al-Ameen will not charge VAT on their sale since the finished product is exempt from VAT. On the other side, they will not be allowed to claim the input VAT deduction of 50 OMR which was paid on the purchase of raw materials.
No VAT will be charged on the supply
(Used in supplying finished product or service which is exempt)
No input VAT deduction
The following are supplies that are exempt from the VAT. It is important to note that specific conditions and guidelines will be issued in executive regulations pertaining to supplies listed below.
Personal baggage and gifts accompanying travelers arriving in the sultanate, and requisites for people with special needs are exempt from Tax. These will be exempted only when the specific conditions and rules mentioned in the regulations are met.
Broadly, VAT exemptions in Oman are given for certain financial services, re-sale residential buildings, and supply of bare land, local passengers, and so on. However, to consider a supply as exempted from the VAT, the specific conditions mentioned in the Oman VAT Act and Executive Regulations need to be fulfilled.
Exempt supplies are non-taxable supplies that are exempted from VAT. In simple words, on the supply of goods or services which are notified as exempt, no VAT is levied.
No. If you are a taxable person or business selling exempt supplies, even if your revenue exceeds the prescribed threshold, you do not need to register for VAT.
No. Businesses will not be allowed to claim Input VAT deduction on VAT paid on the purchases.
No. A supplier making exempt supplies is generally not allowed to recover input VAT in relation to such supplies.
Read more on Oman VAT
Oman VAT, VAT Invoice in Oman, Best VAT Software in Oman, Input VAT Deduction in Oman, How to Calculate VAT in Oman, What is VAT and How does it work, What are the Benefits of Applying VAT in Oman, Place of Supply of Services under Oman VAT, Place of Supply of Goods under Oman VAT, Value of Supply in Oman VAT, How does VAT affect Omani businesses, Time of Supply in Oman VAT
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