Oman is the fourth country in GCC to implement VAT which will come into effect from April 2021 and will levy a VAT rate of 5% on goods to consumers. The government of Oman is optimist about the implementation of VAT in Sultanate of OMAN and its benefits as VAT could reduce their reliance on oil and expand country’s economy.
Firstly, Let’s Look At The Advantages Of VAT:
- Slump in the oil prices is one of the main reasons GCC countries agreed to introduce VAT as it will reduce their dependence on oil and its derivatives as implementation of VAT will act as a new source of income for the nation and also government can diversify towards other sources of income.
- As VAT is a consumption tax, it will provide with constant revenue.
- The revenue from VAT can boost the country’s GDP as revenue from VAT can be used for development of other sectors.
- Chances of tax evasions are less.
- VAT can generate high revenues even with low rate of interest.
- Also, revenue from VAT can be used to increase the standard of living by supporting people of low-income groups.
- VAT is simple to administer and VAT can be considered as a balanced tax system, which is one of the reasons around 160 countries in the world has adopted VAT.
VAT Could Also Result In Some Disadvantages:
- VAT can be regressive; it can affect small businesses because implementation of VAT can be quite expensive as it needs to be calculated and monitored frequently.
- There might be complexities regarding maintenance of financial records as calculation of value added tax at every stage is not an easy task. To avoid that they’ll have to rely on other tax service providers or consultants, which smaller firms will find difficult to afford as they might have to compromise on profits.
Oman can utilize the knowledge gained from other GCC countries that has implemented VAT and be all set to prepare for efficient implementation of VAT in Oman.
Therefore, businesses in Oman should start assessing and streamlining VAT process and can seek assistance from tax registration companies in Oman for ease of tax registration and tax payment process without any complications.
You can hire ADS INTERNATIONAL to avoid any risks or penalties during vat registration in Oman.