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The implementation of Value Added Tax will be a milestone for the country as it will not only help in the growth of the economy but will also aid in the development of the country as a whole. This would prove to be one of the essential steps that the state takes with regards to diversifying its economy.
VAT is a general consumption tax that is levied on taxable goods and services that are bought and sold in Oman including the import of goods and services. It is levied and collected at every stage of the supply chain right from the manufacturer’s purchase of raw materials to a retailer’s sale of an end-product to a consumer. Since it is an indirect tax system, the registered businesses act as agents to levy, collect and remit the tax to the authorities.
|What is VAT and how does it work?|
Omani businesses act as a tax collector for the Sultanate of Oman and are entrusted with the responsibility of charging, collecting and remitting the tax to the government. Businesses must register for VAT if they meet or expect to meet an annual supplies threshold. Any business with annual supplies of mandatory registration threshold or more must register for VAT Generally, businesses with supplies of voluntary registration threshold up to the mandatory threshold above may register voluntarily.
|Who should register for VAT?|
|How Introduction of VAT is going to Affect Oman Economy|
Adopting VAT in Oman is said to have a positive impact on its development and international competitiveness and will contribute to building a sustainable knowledge-based economy for future generations. Let us look at some of the most crucial benefits of applying VAT in Oman:
Input VAT is the tax borne by the taxable person in respect of the goods or services supplied to him or imported for the purpose of conducting the activity. The tax due and payable by any taxable person for any tax period, shall be computed as the excess amount, of the total value of output tax less than the total value of input tax deductible for that period. The taxable person may claim the input tax deduction within 3 years from the date of a valid tax invoice.
Since VAT registration number is to be displayed on business documents, mandatorily, such invoices which provides credibility and authorisation of businesses. With proper documentation in place, businesses appear well established, considering the registration threshold. Due to input VAT deduction, companies would prefer doing business with registered organisations which are truthworthy.
Auditing is an integral part of any business. It is only with a thorough and periodic audit checks, businesses can ensure complete adherence to VAT laws. With the implementation of VAT, businesses will need to ensure that they are keeping the correct records for at least 5 years and that they are able to provide these documents to the FTA upon request. This not only ensures complete compliance, but also gives business owners and shareholders the actual picture of the company’s financial condition.
These are the advantages of the VAT that is to be implemented in Oman. Now the next agenda for you would be to make your business ready for VAT implementation and can be done by choosing a business management software like TallyPrime, which will make you VAT-ready in a jiffy. Take a free demo right away, stay VAT compliant at all times!
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