Oman to implement VAT from April 16

Our Correspondent
Oman will start implementing a 5 per cent value added tax (VAT) from April 16, Oman News Agency announced on March 14.
Saud Nassir Al Shukaili, head of Oman’s Tax Authority, said regulations related to registration, tax payments and collection of VAT have been issued.
Al-Shukaili affirmed that all preparations and necessary requirements have been finalized for the application of the VAT with effect from April 16. The steps include the issuance of statutes related to the VAT (the law and executive regulation), the operation of VAT computer system and electronic collection with the departments concerned.
He pointed out that 93 items, including medical drugs and equipment, will invite zero tax. Services such as education, health care and financial services will be exempt from VAT.
The tax will help the Sultanate generate 1.5 per cent of gross domestic product (GDP) or about 400 million Omani riyals ($1 billion) in revenue annually.
All six Gulf countries agreed in 2018 to introduce a 5 per cent VAT after a slump in oil prices hit revenues. Saudi Arabia, the UAE and Bahrain have already introduced the tax.
Al Shukaili said the government has given ample time for businesses to set up their accounting systems and other necessary procedures for tax compliance.
The tax returns from the VAT will contribute to supporting government spending on some services and infrastructure, and this will reflect positively on citizens’ life, al-Shukaili added.
Oman’s economy has been hit hard by the coronavirus pandemic and low oil prices. The sultanate’s economy likely shrank 6.4 per cent in 2020 but is estimated to make a modest recovery to 1.8 per cent growth this year, according to the International Monetary Fund.
The country also aims to diversify its economy away from oil and is offering long-term residency permits to foreign investors, according to state television.
Oman will also cut rent at the Duqm Special Economic Zone and industrial areas until the end of 2022.