Value Added Tax in Oman
Oman will be applying five percent value-added tax (VAT) in the beginning of 2021, the country’s minister of commerce and industry said on Tuesday 21 January 2020. “VAT is something people don’t really approve of, but it is something we have been lobbying for.” said Ali bin Masoud Al-Sunaidy (Minister of Commerce and Industry in Oman) in a recent interview with Bloomberg at the 2020 World Economic Forum in Davos. In 2018, all six of the Gulf Cooperation Council states agreed to introduce a harmonised 5% VAT regime and customs union. So far, only Saudi Arabia, UAE and Bahrain have proceeded.
The Oman Tax Authorities are continuing with their preparations so as to be ready for the implementation of VAT within the limited time frame. From the experience of businesses in other GCC countries, where VAT has already been implemented, shows that preparing for the introduction of VAT requires careful and timely planning.
The minister further added that Oman was aiming at an annual economic growth of 2.5 to 3 percent and is looking to manufacturing, tourism, fisheries and logistics in as a way of diversifying its economy from the oil industry.
Under the terms specified in the Unified Agreement, VAT will apply to goods and services at the standard rate of five percent. Businesses need to start preparing early, to ensure readiness and day one compliance of VAT.
The following are the benefits of implementing VAT in Oman:
Utilisation of funds for Public Welfare
The revenue gained from the levy of VAT shall be used for various projects that would benefit the general public. Projects like providing proper health care facilities, construction of roads and related infrastructure, etc could prove beneficial.
Diversification of Economy
The economy and would be benefited by the introduction of VAT resulting in the revenue generating areas to expand. It will also help the government to minimize its fixation on the oil and gas sector. Hence, VAT will help in diversifying the economy and thereby assist in the upliftment of the economy in a gradually.
Sense of Spending
Levy of VAT would instil a sense of spending among the people as they would now utilize their purchasing power for only those goods or services that are of essential need to them.
A team of VAT experienced professionals can help you with any assistance that you may require in the process of implementation of VAT.