MUSCAT : As Oman plans to implement the 5% value-added tax in April next year, experts have welcomed the decision that will significantly help to improve the economy.
Essential food items, medical care, education and financial services will be exempt from the planned levy, according to a Royal Decree issued by His Majesty Sultan Haitham bin Tarik.
According to the experts, the 5% value-added tax rate to be applied in the Sultanate is the lowest in the world and it could generate about OMR300m ($780m), a touch over one percent of projected GDP.
Speaking to The Arabian Stories, Dr Anchan C K Managing Director, World Wide Business House LLC [ International Business Advisory Firm] said: “The implementation of VAT in the Sultanate of Oman is a step in the right direction, which will set the path for a new efficient taxation system, it will boost investment as their will be high levels of transparency, credibility and best practices,”
“It will certainly boost the economy and the decision to impose the tax early next year is welcoming,” said Rakesh Nair, Managing Director of Creative Glass and Engineering.
In a statement issued by the Oman News Agency, the tax is expected to provide an additional resource for the state’s public finances to ensure the continued quality of public services, and it will also support the achievement of the Sultanate’s goals to reduce dependence on oil and other hydrocarbon products.
“We all don’t like taxes but its income will protect the currency particularly the Omani riyal,” wrote Saeed Muharami, Finance Professor at Sultan Qaboos University on his Twitter account.
According to ONA statement, the business sector will act as a tax collector in the Sultanate and will bear only the costs of imposing, collecting and claiming value-added tax and complying with tax obligations under the law and regulations, so that the registered establishments add this value to the taxable goods and services they provide, provided that the tax is borne by the final consumer receiving these goods or services.
“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,” Dr. Anchan noted.
“Around 180 countries in the world have put a VAT system in place. Value-added taxes are mandatory to pay for businesses in various parts of the world. It is the single biggest source of revenue- new source of income for the government,” Dr. Anchan added.
Oman will become the fourth country in the GCC to implement VAT, following the UAE, Bahrain and Saudi Arabia.
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