Oman: VAT guide for oil and gas sector

VAT treatment of transactions

VAT treatment of transactions

The tax authority of Oman released a guide concerning value added tax (VAT) treatment for the oil and gas sector and the VAT treatment of transactions involving the oil and gas sector.

Among other items, the VAT guide clarifies:

  • Scope of zero-rating of supply of crude oil, oil derivates, natural gas, and related goods and services
  • Scope of upstream, mid-stream, down-stream, and transportation and storage activities
  • VAT treatment of upstream, mid-stream, and down-stream activities
  • VAT treatment of transactions when the government is involved
  • VAT treatment of transactions between joint venture partners
  • VAT treatment of transactions between operators
  • VAT treatment of procurements by operators (including transactions with affiliates)

KPMG observation

According to the preliminary results for 2021, oil and gas sector revenues represent 68% of total government revenues in Oman. The VAT treatment of transactions in the oil and gas sector depends on several factors—including:

  • Classification of goods such as crude oil, oil derivates, and natural gas
  • Classification of activities into upstream, mid-stream, and down-stream activities
  • Status/form of the taxable person
  • Substance of peculiar transactions
  • Involvement of the government in sovereign and "on-sovereign" capacity

Therefore, businesses need to examine their VAT positions considering the guide. 

Read a January 2022 report prepared by the KPMG member firm in Oman


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