The Sultanate of Oman began implementing the 5% value-added tax law, joining the UAE, Saudi Arabia and Bahrain in an agreement signed by the Gulf Cooperation Council countries 5 years ago.
According to the official Oman News Agency, the application of value-added tax on goods and services came “after the entry of the law. The entry into force of the Royal Decree No. 121/2020 after the end of the six months specified by it. The decree as a transitional period for applying the tax to most goods and services, in addition to goods imported into the Sultanate. With some exceptions. ”
Also read: Everything you need to know about the value-added tax that the Sultanate of Oman decided to implement
Oman exempts basic food commodities from the tax, and the Omani agency said the government “has expanded the list of commodities. Subject to a zero-rate value-added tax from 93 basic food commodities to 488 food commodities.
The goal of the law
The tax aims to restore the financial balance in the Sultanate, which has been affected by the fall in oil prices and the repercussions of the epidemic.
In February, the International Monetary Fund said that Oman’s economy likely contracted 6.4 percent in 2020, due to. Coronavirus crisis and low oil prices, which drained state coffers.
Oman’s budget deficit rose to 17.3 percent of GDP, and was funded by the issuance of foreign bonds. And withdrawals from deposits and sovereign funds. And from the proceeds of privatization, according to the International Fund.
Read also: A proposal by the Omani writer Zakaria Al-Mahrami to the government on value-added tax to satisfy all parties
Last month, the head of Oman’s tax authority, Saud Al-Shukaily, estimated VAT income. Annual, 400 million Omani riyals (nearly one billion dollars).
The Gulf Cooperation Council countries, which depend on energy as their main source of income, agreed to impose a value-added tax in 2016 after the drop in oil prices.
Emirates and Saudi Arabia
In 2018, the UAE and Saudi Arabia began applying the tax before Bahrain followed them in early 2019, while Qatar and Kuwait did not implement this Gulf agreement yet.
Saudi Arabia raised the tax value from 5 to 15 percent, due to the impact of the Corona pandemic on the economy in the oil-rich kingdom.
“Watan” monitors the details of the value-added tax decision
“Watan” monitored, through a video clip, all the available information about the value-added law, as well as claims related to the postponement of its implementation in the Oman Authority.
With this decision, the Sultanate of Oman becomes the fourth Gulf state to adopt this measure in the face of the collapse in oil prices. Upon which their economies depend most.
Also read: The head of the tax authority explodes the anger of the Omanis with what he said about the value-added tax and reminded them of the declaration of “Shawarma”
After Saudi Arabia, the UAE and Bahrain, Oman announced the imposition of this tax after the Sultanate also suffered severely from the suspension of tourism due to the Covid-19 pandemic.
Sultanate of Oman and the tax authority
In the context, the head of the tax authority in the Sultanate of Oman, Saud bin Nasser bin Rashid Al Shukaily, issued, on Sunday, the executive regulations for the value-added tax law.
The Omani agency stated that the law regulation included all procedures related to the general provisions contained in the value-added tax law
It also included the procedures for registration, payment and collection of tax, details of the tax invoice, and procedures for objections and grievances. Noting that the list consists of 13 chapters, with a total of 211 articles.
Preparations for implementing the decision are finished
The head of the tax authority confirmed that all necessary preparations and requirements for the implementation of the value-added tax scheduled for April 16 have been completed.
He pointed out that the executive law’s regulation specified the penalties and penalties in the event that a person did not register with the agency.
He indicated that a taxable person is obligated to register in the event that it exceeds or is expected to exceed the value of his annual supplies. The mandatory registration limit of 38,500 Omani Rials
He indicated that a taxable person has the right to register voluntarily if it exceeds or is expected to exceed the value of his supplies. Annual optional registration limit.
Which is set at the equivalent of 50% of the mandatory registration threshold, and the registration will be electronic through the electronic portal of the device.
He explained that the value-added tax is characterized by neutrality for all business sectors, including small and medium enterprises. The tax is not borne by the enterprises that carry out activities, but by the final consumer on his consumption of goods and services.
The head of the tax authority revealed that there are goods that are subject to the 0% rate, meaning that no tax is imposed on them, pointing to a list of basic commodities. The number of 93 commodities is subject to the zero rate. Also, medicines and medical equipment will be subject to zero rate.
Al-Shukaili stressed that the value-added tax is one of the taxes that does not affect the business sector and has the ability to generate revenues. Abundant according to global practices. It is possible for this tax to generate approximately 1.5% of the value of the GDP, meaning that about 400 million Omani riyals are expected to be collected annually from the application of this tax.
Follow our channel on YouTube to see all new
Click here and activate the subscribe button