Businesses in Oman: Are you ready for VAT?
Based in or trading with Oman? You’ll soon need to get your business up to speed with the complexities and nuances of a brand new VAT system, which recently moved a step closer to being implemented in the country.
Majlis Al Shura, the advisory council to Oman’s lower house, discussed draft VAT legislation at a meeting earlier this month, during which it revealed it expects the tax to generate 400 million Omani riyals ($1.04 billion) a year for the country’s economy.
The latest legislation indicates Oman is aiming to introduce VAT in 2022, following its neighbours Saudi Arabia, the UAE and Bahrain in adopting a comprehensive system based largely on the European model.
Nathan Farmer, Commercial Director at Innovate Tax, says: “Oman, like other nations in the Gulf Cooperation Council (GCC), has suffered from the drop in oil prices and the Covid-19 pandemic and sees VAT as its best hope of stabilising revenues in the medium term. As such, I expect it to strictly enforce regulations to ensure maximum compliance among businesses operating in the country.
“We’ve seen across the GCC that the implementation of VAT is an enormous challenge for businesses new and old, large and small. Even two years after VAT was launched in Saudi Arabia and the UAE there remains a huge rate of non-compliance – and I predict businesses in Oman will face the same risks in 2021 and beyond.
“While the framework of Oman’s system has been outlined, there are potentially hundreds of rules, rates and requirements that are yet to be revealed. Once these become clear, businesses must quickly understand and adhere to them or risk non-compliance.
“That means there is huge pressure on companies trading in Oman to ensure they comply with the regulations set to be imposed if they are to avoid penalties. The best way to do this is by investing in tax technology that guarantees 100% accuracy, speed and efficiency.”
Dr Ruwaish Al Maharbi, a member of the Economic Committee of the State Council, told Al Shabiba the committee has now studied the draft VAT law and identified the articles that require further review.
“Certain criteria must be met before implementing the law, including the presence of the correct environment to put this into practice,” he added.
The State Council is currently reviewing the draft VAT legislation as well as a proposed Income Tax system, both of which were passed by the Majlis Al Shura in July.