As per the guidelines of union VAT agreement 2016 of the Gulf Cooperation Council (GCC), Oman is set to implement VAT in early 2022. By introducing VAT in early 2022, Oman would be the fourth of the six Arab Gulf member states to follow suit. The current steps taken by the state authorities and information concluded by sources suggest that the implementation would be done after January 2022.
Since there are no lines drawn and no laws made in reference to the upcoming VAT implementation, businesses need to take preparatory measures according to the stipulated principles in the treaty and VAT treatments and approaches taken further by other member states (that can potentially be followed in Oman). For clarity on potential outcomes and ideal steps to be taken, businesses can rely on professional VAT specialist advice.
The Impact of VAT implementation on Omani Businesses
The opined VAT changes would influence business finance deeply and demand reviews on existing operations, procedures and practices, systems, contracts, international experience, pricing, policies, compliances, and documentations. Almost every industry will be affected by the VAT introduction but the following are some of the industries that may experience changes more than others:
- Consumer product industries
Food Items, Education, Health, Insurance, etc. may come under this category.
- Industrial product industries
Oil & Gas, Investment metals, etc. may come under this category.
- Technology, media, and telecommunications
As mentioned above, no lines are drawn so far concerning any category. Omani taxation authorities may examine the trends of industries and learn from mistakes committed by the GCC member states while implementing the taxation change.
- Financial services
Like UAE & KSA, Omani taxation authorities may enforce the VAT changes differently on fee-based and margin-based services or may employ a different approach.
- Real estate
Omani authorities may examine the trends of sector and may categorize several products and services under taxable, zero-rate taxable or exemptible brackets.
Businesses need to brace themselves for the VAT execution as the implementation date is approaching. There are a large number of reputational, operational, and financial risks associated with the failure of compliance. By partnering with leading VAT consultancy services for VAT specialist advice, businesses can devise plans to prepare themselves for what’s coming.
Talk to our experts for a free VAT consultation
Millennial Partners’ seasoned consultants have an impressive history of servicing GCC clients with VAT implementation. Our subject matter experts can assist with VAT implementation roadmaps to ensure Omani businesses are prepared for the upcoming VAT system.
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