Oman to implement tourist VAT refund scheme to boost visitor spending, competitiveness

OMAN – Oman’s Tax Authority has announced plans to introduce a Value Added Tax (VAT) refund system for international tourists, a strategic move designed to enhance the Sultanate’s appeal as a shopping destination and increase visitor expenditure.

The initiative, revealed during the Authority’s first official media briefing, aims to align Oman with global tourism standards and stimulate retail activity within the tourism economy.

Aligning with Global Tourism Benchmarks

The proposed mechanism will allow tourists to reclaim VAT paid on eligible purchases during their stay, a practice long established in competing destinations across Europe, the UAE, and Saudi Arabia.

A senior Tax Authority official stated that the government is finalizing agreements with specialized service providers to operationalize the system, determining the associated costs and refund percentages.

This development directly addresses a key competitive factor, as the absence of such a scheme has historically placed Oman at a slight disadvantage for high-spending retail tourists compared to neighboring Gulf states that already offer VAT refunds.

A Strategic Pillar for Tourism-Led Economic Growth

The announcement forms part of a broader review of Oman’s fiscal system, following confirmation that the Tax Authority successfully met its 2025 revenue targets, with total current revenues estimated at approximately OMR 1.373 billion (US$3.57 billion).

By introducing the refund, Oman signals a dual commitment: maintaining a robust revenue framework while implementing targeted incentives to grow the non-oil economy through tourism.

The policy is expected to lengthen the economic value chain of each visitor, encouraging spending in malls, luxury boutiques, and traditional souks, thereby supporting retailers, hospitality venues, and related services.

Enhancing Oman’s Integrated Tourism Offer

For Oman’s tourism and hospitality sector, this policy is a significant demand-side enhancement. It complements ongoing investments in luxury resorts, cultural attractions, and adventure tourism by adding a tangible financial incentive for visitor spending.

The move is strategically timed as Oman continues to execute its national tourism strategy, aiming to diversify its visitor base and increase per-capita tourism revenue.

By adopting this international best practice, Oman not only improves its destination competitiveness but also demonstrates a proactive, tourist-centric approach to economic policy, which is likely to be positively received by tour operators and luxury travel planners worldwide.

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