The Value Added Tax (VAT), being implemented in Oman starting April 2021, will be imposed on most goods and services with the exemption of a few including basic foodstuffs, healthcare goods and services and public transport.
According to the Government Communication Centre (GCC), the five per cent VAT in Oman is one of the lowest compared to international rates. ‘Its impact on individual cost of life is expected to be limited,’ GCC said in a statement.
The goods and services exempted from the tax include educational services, non-developed land, resale of real estate, import of medical drugs and equipment as well as import of gold, silver and platinum for investment.
The list of non-taxable goods and services also includes import of crude oil (products and derivatives) and natural gas; import of maritime, air and land transport vehicles for goods and passengers for commercial purposes (aircraft, rescue ships and auxiliary crafts); import of services and supplies for the disabled and charitable organisations; financial services; and lease of real estate properties for residential purposes.
VAT is an indirect tax borne by the end consumer; the importer calculates and collects the five per cent VAT and delivers the value to the Tax Authority.
‘The implementation of VAT is hoped to have a positive impact on economic and social development, besides fueling the international competitiveness of the sultanate because financial revenue from the tax will contribute to the establishment of a sustainable economy for future generations,’ the GCC stated.
‘The rates of implementation of VAT in 160 countries range from five to 27 per cent. VAT is expected to provide an additional source of support to the state’s general finance. It is also expected to ensure the quality of public services and enhance realisation of the sultanate’s goals of diminishing dependence on oil and other hydrocarbon sectors as main sources of revenue.’
Other positive effects will be the improvement of public services, sustained development of future infrastructure and generation of more stable tax income that will help predict good or difficult economic conditions.
VAT’s efficacy lies in its low cost in terms of management and collection.
The business sector will serve as collector of tax in Oman – imposing the VAT, collecting it, claiming it and adhering to it as per the law and bylaw.
Taxpayer establishments will add the VAT on taxable goods and services, while the end consumer of goods and services will bear the cost of the tax.
The business sector is required to register for VAT in order to meet targets, and operate a competent system of accountancy and billing, besides maintaining accurate accounting registers.
As per the VAT Law, the business sector has to account for the rate of value of this tax to be borne by the consumer against the procurement of goods and services at business outlets. It has to provide necessary information that helps the consumer select the goods and services of choice.
The regulations also require VAT to be stated in business establishments’ bills.
The Gulf Cooperation Council’s unified agreement on VAT, signed by member states in November 2016, defined the principles on which the VAT Law is based in each state. Every member state may opt for different tax adjustments to some aspects of the agreement.
Exempted goods and services
Healthcare goods and services
Resale of real estate
Import of medical drugs and equipment
Import of gold, silver and platinum for investment
Import of crude oil (products and derivatives)
Import of supplies for the disabled, charitable organisations
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