“VAT is something people really approve of, but this is something we have been lobbying for.” said Ali bin Masoud Al-Sunaidy (Minister of Commerce and Industry in Oman) at the 2020 World Economic Forum in Davos. The minister further added that Oman was aiming for 2.5 to 3 percent annual economic growth and is looking to manufacturing, tourism, fisheries and logistics in a bid to diversify its economy away from oil industry.
Oman will apply 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.
As we understand, local VAT legislation, regulations and guidance is under preparation and review. Under the terms of the Unified Agreement, VAT will apply to goods and services at the standard rate of five percent. This has geared up the economy as a whole to find out its implications and assessments.
Implementation and Benefits
The implementation of Value Added Tax would be a breakthrough for the country as it will aid in not just the growth of the economy but will also assist in the country’s overall development. This will determine to be one of the most crucial courses of action that the state considers in relation to the matter of diversification of the economy.
The Benefits of VAT for Oman are as laid down below:
1. Aids in creating a diversified economy
With the implementation of VAT, the economy and would expand and it will also help the government to minimize its fixation on the oil and gas sector. Hence VAT will aid in diversification and thereby aid in the upliftment of the economy in a gradual manner.
2. Sense of Spending
The introduction of VAT would turn out to be beneficial for society as the people would now utilize their purchasing power only on goods or services that are of essential need to them.
3. Utilisation of funds for Public Welfare
The revenue thus gained from VAT shall be used for various projects which would lead to the upliftment and well-being of the general public. Such projects include providing proper health care facilities, construction of roads and related infrastructure, etc.
4. Lesser scope of Tax Evasion
When in comparison to the multiple other taxes that are levied on the people, the chances of evading this type of tax are very less in probability.
5. Higher Standard of Living
Implementation and levy of VAT would help in gradually increasing the standard of living of the people. This can be attained by the proper provisioning of the necessary funds to the government so that it could focus on the various developmental activities that would benefit the people.
To assist and aid businesses and establishments on introduction of VAT in Oman, tax experts, business advisors and consultants can provide assistance and support.