Oman is set to expand the scope of zero-rated Value Added Tax (VAT) applicable to basic food commodities, effective 1 October 2026.
Under Tax Authority Decision No. 225/2026, the revised list covers 807 food items that will qualify for VAT at the zero rate, subject to the applicable conditions and classifications prescribed by the Tax Authority.
Key Food Categories Covered
The expanded list includes a wide range of essential food commodities, including:
- Meat and poultry
- Milk and dairy products
- Cheese
- Fish, shrimp and squid
- Eggs
- Fruits and vegetables
- Grains and cereals
- Legumes
- Flour and bread
- Water
- Other specified basic food commodities
What Does Zero-Rated VAT Mean?
A zero-rated supply is a taxable supply subject to VAT at 0%. It is important to distinguish zero-rated supplies from VAT-exempt supplies, as the VAT treatment and input tax implications are different.
The introduction of the expanded list does not mean that Oman is moving to a general zero-VAT system. The standard 5% VAT rate continues to apply to taxable goods and services unless a specific zero-rating or exemption applies.
Impact on Businesses
Businesses involved in the import, distribution, wholesale and retail of food products should review their VAT treatment before the effective date.
Product Classification
Businesses should verify whether individual products fall within the 807 items specified under the revised list.
Accounting & ERP Systems
VAT codes and tax rates in accounting, ERP, invoicing and POS systems should be reviewed and updated where necessary.
Sales Invoices
Businesses should ensure that invoices issued from 1 October 2026 reflect the correct VAT treatment.
VAT Returns
Zero-rated supplies should be correctly classified and reported in VAT returns, together with the relevant input VAT treatment.
Pricing & Product Master Data
Product descriptions, item codes, VAT classifications and pricing should be reviewed to ensure consistency across business systems.
Documentation & Records
Adequate records should be maintained to substantiate the VAT treatment applied to each product.
Important Note
This article is provided for general information purposes and should not be considered tax or legal advice. Businesses should refer to the applicable Tax Authority decisions, regulations and official guidance when determining the VAT treatment of specific products.
For professional assistance and expert advice, contact Mark Chartered Accountants & Business Advisors today.