Oman to Launch Tourist VAT Refund System to Boost Shopping and Tourism
Oman is preparing to introduce a new VAT refund system for tourists, a move that is expected to strengthen its tourism sector and increase retail spending across the country. The new system will allow international visitors to claim back Value Added Tax on eligible purchases, making shopping more attractive and affordable for tourists visiting Oman.
This initiative places Oman alongside countries such as the UAE, Saudi Arabia, Singapore, Thailand, and Malaysia, all of which already offer VAT refunds to tourists as part of their tourism and retail growth strategies. The system is expected to be implemented in 2026 and will play an important role in enhancing Oman’s position as a competitive travel and shopping destination in the region.
How the Tourist VAT Refund System Works
The concept behind tourist VAT refunds is simple. When visitors purchase goods during their stay, they pay VAT as part of the price. However, since they are not residents of the country, many governments allow them to reclaim that VAT before leaving. This effectively reduces the cost of shopping for tourists and encourages them to spend more during their visit.
A Strategy to Support Economic Growth
For Oman, the introduction of this system is not only about tax policy but also about economic growth. Tourism has become a key focus for many Gulf countries that are looking to diversify their economies and reduce dependence on oil revenue. By making shopping more appealing to international visitors, Oman hopes to increase tourist spending, support local businesses, and create new job opportunities within the retail and hospitality sectors.
UAE’s Successful VAT Refund Model
The UAE already has a well-established tourist VAT refund system, and it has proven to be highly effective. Visitors to the UAE can claim VAT refunds on eligible goods purchased from registered retailers. Refunds are processed through digital systems available at airports and other exit points, making the process quick and convenient. This has helped the UAE position itself as one of the world’s leading shopping destinations, particularly for luxury goods and high-end retail.
Similar Moves by Saudi Arabia and Asia
Saudi Arabia has also recently introduced a similar system, allowing tourists to claim back VAT on purchases made during their stay. With a higher VAT rate in Saudi Arabia, the refund system is expected to significantly influence tourist spending patterns, especially in the luxury and fashion sectors. Singapore and Thailand have long used VAT refund schemes to attract international shoppers, and their success has encouraged other countries to follow the same path.
Growing Global Trend in Tourism
Oman’s decision to implement a VAT refund system reflects a broader global trend. Governments are increasingly using tax-free shopping incentives as a way to attract high-spending tourists. When visitors know they can recover part of their spending through VAT refunds, they are more likely to make larger purchases, particularly on items such as electronics, jewellery, fashion, and luxury goods.
Benefits for Local Businesses
Local retailers in Oman are also expected to benefit from this move. With increased tourist spending, businesses will see higher sales volumes, especially in major shopping areas and malls. Hotels, restaurants, and other tourism-related services are likely to experience indirect benefits as well, as more visitors choose Oman as a shopping and travel destination.
Impact on GCC Tourism Competition
From a regional perspective, the introduction of tourist VAT refunds in Oman will increase competition among Gulf countries to attract international visitors. The GCC region is already known for luxury shopping and modern retail experiences, and the addition of VAT refund systems across multiple countries will further strengthen its appeal to global travellers.
However, Oman still has its own unique strengths. The country offers natural beauty, cultural heritage, and a growing hospitality sector. By combining these attractions with tax-free shopping benefits, Oman aims to create a more complete and attractive experience for tourists.
Economic Impact and Government Revenue
Experts believe that tourist VAT refund systems do not significantly reduce government revenue. Instead, they often lead to higher overall economic activity. Increased tourist spending generates additional income for businesses, which in turn leads to more employment and higher indirect tax collections. In this way, VAT refund schemes are seen as an investment in long-term economic growth rather than a loss of tax income.
As Oman prepares to launch its VAT refund system, the move is being closely watched by businesses and tourism stakeholders across the region. If implemented effectively, it could significantly boost the country’s tourism numbers and strengthen its retail sector.
The introduction of VAT refunds for tourists marks another step in Oman’s efforts to diversify its economy and enhance its global appeal. With international travel continuing to recover and competition among destinations increasing, offering tax-free shopping could play a key role in attracting visitors and encouraging them to spend more during their stay.
