“The introduction of value added tax has become more certain now with the announcements that VAT is likely to be effective from September 2019,” said Davis Kallukaran, Managing partner, Crowe Oman. Welcoming the delegates to the workshop, Kallukaran emphasised the importance of embracing VAT and asked businesses to start preparing for the new law. He insisted that corporates must equip themselves with competencies to enable them to face the challenges and complexities of VAT.
The session on VAT was conducted by Aastha Rangan, Director VAT Advisory at Crowe. “VAT is a tax on final consumption of goods and services which is indirectly charged on a taxable vendor on their sale of goods and services. The vendor is allowed to take VAT credit on its purchases and hence the net impact on vendors is nullified. Hence, businesses should understand the fact that they are the ‘tax collectors’ for the government.”
If they do not do it correctly, they will have to pay penalties as stated in the local VAT law, she continued. Later, Antony Kallukaran focused on systems integration and IT enhancements needed for VAT implementation and emphasised that corporates must start preparing well in advance.
As per the framework agreement, all goods and services are subject to 5 per cent VAT. However, VAT will either be zero rated or exempt for the education, health, real estate and local transport. It also gives option to Member states to zero rate the oil, petroleum derivatives and gas sector. The Ministry of Finance recently stated that VAT will be not imposed in the health, education, part of the housing and logistics sectors and 94 food items in Oman.
Markus Susilo, Partner in charge of Crowe’s UAE VAT practice, said: “The typical query from most businesses is that “what would be the basis of starting with the implementation of VAT if laws are not yet made public?”. VAT is already implemented in 160+ countries in the world since its first introduction in 1950s and they have similar concepts among each other. Guidelines have been outlined in the GCC VAT Framework Agreement and they are in line with the concept of the other non-GCC jurisdictions with VAT.
Businesses should take a proactive approach and plan way ahead in implementing the VAT using the available sources rather than awaiting the last moment to start. Going by the experiences of VAT implementation in other non-GCC countries, businesses require between 12-18 months for the implementation. This is even the case in jurisdictions where similar taxations were in place prior to the introduction of VAT or GST, added Susilo.
Source Link: www.omanobserver.om