The Oman Tax Authority (OTA) issued the VAT Guide on the Oil & Gas Sector. The Guide aims to explain the VAT treatment of transactions in this sector.  Among others, the Guide clarifies the following:

  1. Scope of zero-rating of supply of crude oil, oil derivates, natural gas and related goods and services
  2. Scope of upstream, mid-stream, down-stream, and transportation and storage activities
  3. VAT treatment of upstream activities, mid-stream and down-stream activities
  4. VAT treatment of transactions related to the government
  5. VAT treatment of transactions between JV partners
  6. VAT treatment of transactions between operators
  7. VAT treatment of procurements by an operators (including transactions with affiliates)

To access the VAT Guide on the Oil & Gas Sector in English, click here.

According to the preliminary results of 2021, Oil & Gas Sector revenues represent 68 percent of total government revenues in Oman.  For obvious reasons, a sector so critical to the economy enjoys special VAT treatment, in Oman as well as in the other GCC countries that have implemented VAT. 

VAT treatment of transactions in the Oil & Gas Sector depends on several factors including the classification of goods such as crude oil, oil derivates, natural gas, classification of activities into upstream, mid-stream, down-stream, status/form of the taxable person, substance of peculiar transactions, and the involvement of the government in sovereign and on-sovereign capacity, among others. Therefore, businesses need to examine their VAT positions considering the Guide to avoid onerous penal consequences. 

KPMG has a dedicated team of experienced indirect tax specialists based in Oman supported by a larger, experienced regional team. If you need assistance with VAT or other indirect tax related matters in Oman, please reach out to your tax advisors at KPMG or the contacts mentioned below.