Oman and United Arab Emirates: Implementation of “Special Zones” from a VAT perspective and others VAT updates

New VAT clarifications and guidance have been issued by Oman and United Arab Emirates’ authorities.

In this article, we provide a summary of the updates.

VAT updates concerning Oman

Creation of special zones

On 27 April 2021, the Public Authority for Special Economic Zones and Free Zones (OPAZ) in coordination with the Oman Tax Authorities (OTA) have 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 the Oman VAT Law and Executive Regulations. Accordingly, supply of goods and services to or from the Special Zones, or within them, could be zero-rated, subject to fulfilment of some conditions prescribed in the Executive Regulations, such as being registered for VAT, have a specific license and do not benefit from another VAT exemption.

The list of medical equipment and medicines which would be VAT zero-rated

The Ministry of Health in Oman has published a list of medical equipment and medicines which would be VAT zero-rated in Oman. This list is available on the website of the Ministry of Health of Oman.

Clarifications of registration under the Joint Supplier Registration System (JSRS) and publication of a guide for the registration of non-resident persons

The Ministry of Energy and Minerals (MEM) has clarified that the registration issued under the Joint Supplier Registration System (JSRS) shall be accepted in place of MEM licenses, registration and certification to comply with the conditions to benefit for a zero rate on supplies of goods and services related to supply of oil, oil derivatives and natural gas.

The OTA recently issued revised guidance on registration by non-resident persons, notably outlining the procedure to register a tax representative. For more information, please refer to the Deloitte alert on the following link.

VAT updates concerning the United Arab Emirates

Amendments to national rules on administrative penalties for tax violations

Concerning the United Arab Emirates: the United Arab Emirates’ regulator has amended the national penalties rules applicable to tax violations. The aim of these updates it to encourage the early submission of voluntary declarations in case of errors by applying lower percentages of penalties for disclosures submitted closer to the due date of the concerned tax return.

In a nutshell, these changes, which should became applicable within 60 days from the 28 April 2021, are the following;

  • Implementation of a concessionary measure which may reduce the quantum of penalties imposed on some taxpayers
  • The late payment penalties will decrease at a rate of 4% per month, instead of a previous rate of 1% per day after one month delay
  • Taxpayers will now have 20 business days to make the tax payment in case of a voluntary disclosure or a tax assessment, instead of the date when the original tax return relating to the unpaid tax was due
  • In case of errors in submitted tax returns, tax assessments or refund applications, the penalties will be incremental and range from 5% (if the error is disclosed within a year) to 40% (for disclosures after 4 years)
Vanessa Irigoyen

With more than 16 years of experience, Vanessa has extensive expertise in the implementation of international efficiency business models for customs, export control and indirect tax purposes. Her functions notably […]

Morgiane Quartana

Junior Staff since October 2019 in the French Indirect Tax team