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VAT in effect, businesses cope with initial hiccups

17 Apr 2021

Value Added Tax (VAT) came into effect in Oman on April 16 prompting businesses to work in earnest to be prepared for the new tax regime. Supermarket staff worked overtime to replace price tags of products displayed on shelves.

“Putting new VAT applicable price tags in over 10,000 products on the shelves is a mammoth task,” said Mohammed Iqbal, a supermarket manager in Ruwi.

“We requested permission to work overnight during the lockdown which was denied,” he informed.

Shakeer Hussain, manager at Grand Hypermarket in Ruwi, said, “We have 50,000 products on our shelves of prices ranging from 50bz to over RO250. Replacing the price tags of such a large number of items is the biggest challenge of VAT implementation.”

The timing of implementation, in the midst of COVID-19 measures when businesses are closing earlier and during Ramadan when work slows down,  further added the challenge. “To avoid inconvenience to customers, we put a notice about  the new tax and started price tag update process well in advance. We worked overtime to update the price tags,” Hussain informed. 

 

 

Disruption in supplies 

 

“The last batch of supplies from distributors was on April 14; hopefully they will restart from April 18,” said Hussain. “But we took the situation into consideration and stocked supplies keeping the supply disruption in mind.”

Pointing at his half-empty shelves, Iqbal said, “Our suppliers stopped taking orders saying they will restart once VAT is implemented.”

Mubashir A M, field sales manager at Enhance Oman, a brand distribution and retail management solutions provider, described the timing of VAT implementation as ‘perfect’. “We just needed to stop our services for one day on Thursday, April 15, and any case, we do not deliver on Fridays and Saturdays. We will start operations as usual from Sunday, April 18.” 

Enhance Oman started preparing for VAT implementation more than two months ago, Mubashir claimed. “The only challenge for us is the confusion of small players who are not yet registered and do not know how to account the added VAT cost.”

 

Adjustment of extra cost

 

M Abraham’s business in auto spare parts comes under the lowest category, but most of his suppliers are in the RO1mn category which is in the first phase of registration. “While our category will be allowed to register at a later stage, our suppliers are already charging us five per cent VAT. We do not know how to adjust this extra cost we are paying till we get the VAT registration certificate,” Abraham said. 

Replying to a query on the registration timeframe of small businesses, Aastha Rangan, director of VAT Services at Crowe Oman, said, “Whether a business offers a service or buys goods from a taxable company, in both scenarios business owners can claim the VAT credit.”

(Text and photo by Syed Fasiuddin)

 

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