Value Added Tax (the “VAT”) has been effective from 16 April 2021 through the VAT Law issued by virtue of Royal Decree No. 121/2020 and Oman Tax Authority Decision No. 3/2021 (the “VAT Legislation”).
The VAT is a consumption tax, which means that it applies to most goods and services purchased and availed by consumers within the Sultanate of Oman. The VAT Legislation sets the standard rate of this tax to 5% except where certain goods and services are either specifically exempted or zero rated.
If you are a registered entity/customer under the VAT law please share your VAT registration details to your designated relationship manager/branch for our records.
Oman Arab Bank VAT registration number for your records / administration, VATIN: OM1100005523.
VAT is a transaction-based indirect tax, commonly referred to as a type of general consumption tax. In a country with a VAT system, it is imposed on most supplies of goods and services bought and sold. VAT is charged at each step of the ‘supply chain’. Ultimately, end-consumers generally bear the VAT cost while registered businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government.
There are two VAT rates applicable within Oman:
In addition, certain category of supplies will be “exempt” from VAT.
Yes. Oman Arab Bank, being a VAT registered business, is required to collect VAT on its taxable supplies in Sultanate of Oman.
Exceptions to VAT are only by law, and the Tax Authority publishes these. There is a possibility for business owners to claim back their VAT payments, provided they have registered for VAT and meet the requirements. For further details, please visit https://tms.taxoman.gov.om/portal/web/taxportal/vat-tax
Yes, once you receive your Tax registration number (VATIN) you are required to send it to us. This is important for us to update your account details and ensure that your VATIN is reflected in your monthly invoice. The VAT registration number can be shared with your dedicated relationship manager and or your branch.
No, VAT does not apply on Credit card transactions, however, will apply in the case of annual fees/late payment fee/cash withdrawal and other service charges as applicable.
Yes. Oman Arab Bank, a VAT registered business, is required to collect VAT on its taxable supplies of goods and services made in Oman. The collected VAT will be remitted to Oman Tax Authority (OTA).
A supply of financial products/services by Oman Arab Bank conducted in return for an explicit income where the payment of the consideration is as a fee, commission or commercial deduction shall be subject to VAT. However, supplies of other financial services if remunerated by way of an implicit margin (such as interest) shall not be subject to VAT as these qualify to be treated as exempt supplies.
Where services are supplied to a recipient that does not have a place of residence in Oman, and who is outside the state at the time services are performed, these supplies may be zero-rated.
The repayment of the principal amount borrowed from the bank will not constitute consideration for a supply and hence will fall outside the scope of VAT. This means that VAT would not be payable in addition to the principal amount borrowed.
If additional services are rendered as part of the transaction (for example administration fees) these may be subject to VAT.
Any deposits into or withdrawals from current, deposit or savings accounts shall not be subject to VAT. However, if there a service charge or fee imposed by the Bank, then these services shall subject to VAT.
For example, in ATM, branches or online banking, etc.
No. However, for further details of fees and charges you may refer to the Tariff of Charges published in the Bank’s website.
No, the VAT treatment for a fee should be similar irrespective of the channel.
Taxable goods and services are charged VAT at the rate of 5%. The frequency of VAT entries shall correspond with the frequency of bank charges. Where, for example, a fee is being imposed on a monthly basis, VAT will be imposed on a monthly basis as well. For other fees, such as credit card fees, VAT will be charged as a separate entry for each transaction where it is applicable.
The bank’s Tax registration number is OM1100005523.
VAT is a transaction-based tax. Accordingly, VAT (if applicable) will be levied on each instance of a transaction i.e. if monthly bank fees are levied, then VAT will be levied on each monthly fee charged by the bank.
VAT will not be charged on the withdrawal amount. However, any fees charged on withdrawal will be subject to VAT.
If a taxable fee or charge is cancelled and/or unsuccessful, the corresponding VAT amount paid by the client shall also be refunded. Kindly note that there could be a processing or administrative fee associated with the cancellation which could be subject to VAT.
Supply of financial products/services by Oman Arab Bank conducted in return for an explicit fee, charge, discount, commission, or similar shall be subject to VAT. Where Oman Arab Bank levies explicit fees for Outward/ Inward Remittance Advice Requests, standard rate of VAT would be applicable. However, no VAT on the principal amount remitted/transferred.
Where fees are paid in a foreign currency, the VAT amount payable to Oman Arab Bank would be in foreign currency. Based on the VAT legislation, when issuing tax invoice to the client, Oman Arab Bank is required to convert foreign currency to local currency (OMR) based on the rates prescribed by the Central Bank of Oman.
Foreign currency exchange is typically on an implicit margin basis and would be exempt from VAT. Any service fees relating to the foreign currency exchange will be subject to VAT.
Products offered by our Cash division follow the same rules for financial services as other products. In general, all fees and commissions such as Domestic transfers RTGS and Cashier Order charged by the Bank shall be subject to VAT. However, if you are established outside Oman, VAT may not apply as the services are likely to be treated as “exported” from a VAT perspective meaning it qualifies for a zero-rated treatment.
Fees and commissions charged for trade finance products and services such as Trade structuring fees, facility fees, commission on issuance of guarantees etc. are subject to 5% VAT. Exported services, however, will be subject to 0% VAT (“zero-rated”). The interest / profit charged on the financing of the trade finance product and services is VAT exempt.
Where Oman Arab Bank is providing services to clients established outside Oman, then these services may qualify for zero rated treatment and may not attract any VAT.
