OMAN ARAB BANK VAT FAQs
1. What is VAT?
VAT is a transaction based indirect tax, and commonly referred to as a type of general consumption tax. In a country which has a VAT system, it is imposed on most supplies of goods and services that are 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.
2. What is the rate of VAT?
There are two VAT rates applicable within Oman
- The standard rate of VAT – 5%; and
- The zero rate of VAT – 0%.
In addition, certain category of supplies will be “exempt” from VAT.
3. Is VAT applicable on all the products and services provided by Oman Arab Bank?
Yes. Oman Arab Bank, being a VAT registered business, is required to collect VAT on its taxable supplies in Sultanate of Oman.
4. Is it mandatory to pay VAT?
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
5. I am a business owner. I have registered with the Oman Tax authority and have received my certificate and VAT registration no. Do I need to share this with Oman Arab Bank?
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.
6. Will I be charged VAT on Credit Card Transactions?
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.
7. Is Oman Arab Bank required to charge VAT?
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).
8. Are services rendered by Oman Arab Bank subject to VAT?
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.
9. When I repay an amount borrowed from the Bank (for example a loan or an amount on credit card), will I be required to pay VAT in addition to the amount borrowed?
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.
10. Is VAT applicable on withdrawals made from Current, Deposit or Savings Accounts?
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.
11. Will I be notified of the fees and charges that are subject to VAT prior to the transaction? 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.
12. Will the VAT treatment change for transactions performed via different channels?
No, the VAT treatment for a fee should be similar irrespective of the channel.
13. How will Oman Arab Bank apply VAT on its charges?
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.
14. What is the bank’s Tax Registration Number?
The bank’s Tax registration number is OM1100005523.
15. How will VAT be charged if I make the same type of transaction several times?
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.
16. Will there be VAT charged on withdrawals made through an ATM?
VAT will not be charged on the withdrawal amount. However, any fees charged on withdrawal will be subject to VAT.
17. Will VAT charges be refunded if my transaction is cancelled or unsuccessful?
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.
18. Is VAT applicable for all local payments made and / or received (e.g. Telegraphic Transfers & Online Banking)?
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.
19. How will VAT be charged where I have paid fees in a foreign currency?
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.
20. How are foreign currency exchange transactions treated from a VAT perspective?
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.
21. How is VAT charged on Cash management products and services?
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.
22. Are Trade Finance products subject to VAT?
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.
23. I am a business established outside Oman, acquiring services from the trade division of Oman Arab Bank, would I need to pay VAT in Oman on the services I am acquiring?
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.