Oman has launched the implementation of VAT from 2019 and will levy a marginal rate of 5% as the VAT rate, but this decision is being reviewed by the government and is not final as the proposal has to undergo scrutiny at various levels. quickbooks dealer in dubai have much time to prepare for the launch of VAT. So, if you are planning to launch or start a business in OMAN, you must be well prepared and informed on VAT and various benefits and essentials as pre-requisites.
In the Gulf Cooperation Council (GCC) region, VAT is being introduced under the GCC VAT agreement which was approved by the council members. UAE and the Kingdom of Saudi Arabia were the first 2 council members to implement VAT. The Kingdom of Bahrain has implemented VAT in early 2019, and has become the third member state to implement VAT. Now Oman and Qatar are set to follow the footsteps of Bahrain and introduce VAT in their country. If you are planning to set up a business in Oman, you should know certain essentials.
Oman is different from the other Gulf Cooperation Council member states, and it needs to ensure the rollout of this tax goes without any ruckus. Armed with the data from the three countries which have already implemented VAT, Oman can conduct a technical and fiscal analysis of VAT and determine the impact of it on the economy which would help in the smooth transitioning of the Omani economy to a follow Value Added Tax.
Now, before we explain the benefits of applying VAT in OMAN, we need to have some basic understanding of what VAT is and how it functions.
Value Added Tax (VAT), also known as Goods and Services Tax (GST) in some countries, is an indirect tax which is on consumption of a good or a service and is assessed on the value added to the said goods and services at each stage of production or distribution. Under any government following VAT, the ultimate tax burden is endured by the consumer.
It is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed.
quickbooks dubai dealer is based on taxpayers’ consumption rather than their income. In contrast to a progressive income tax, which levies greater taxes on higher-level earners, VAT applies equally to every purchase.
Omani businesses act as tax collectors for the Sultanate of Oman and are assigned with the duty of charging, collecting, and remitting the tax to the government. Companies need to register for VAT if they happen or expect to meet a yearly deliveries threshold.
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.
So, some of the benefits of applying VAT in Oman are as follows:
Sense of Expenditure
The Introduction of VAT would be beneficial for society as the people would now spend money only on things that are needed and on sensible items. As VAT is also dynamically applied on different kind of products as slabs, so people would like to spend money on basic commodity rather on leisure.
Entitled to claim input VAT reduction
Input VAT is the tax abided by the taxable person in respect of the products or services provided to him or imported to conduct the activity. The tax unpaid and payable by any chargeable person for any tax period will be figured as the excess amount, of the overall value of output tax less than the complete value of input tax-deductible for that phase. Bahrain quickbooks uae person can claim the input tax deduction in 3 years from the date of an effective tax invoice.
With the implementation of VAT, industries will need to ensure that they are maintaining the precise records for at least 5 years for submitting for FTA upon request. This not only confirms complete compliance but also gives the actual picture of the business’s economic circumstance. This will also help the government as less organizations would be able to steal tax or perform frauds.
Diversification of the economy
This would lead to the expansion of the economy and will also help the government to lessen its dependence on the oil and gas sector. The diversification will help to uplift the economy gradually. It will not only empower the nation’s economy but will also strengthen it as more tax payers will pay the taxes and govt will never run out of funds resulting in better infrastructure and better options of expenditure.
In comparison to the other taxes that are levied to the people, the chances of evading this type of tax are very less. As it is been directly managed and monitored, less frauds will be done and tax evasion can be minimized
Reliability and business status
As VAT registration number is to be exhibited on business documents, compulsory, such statements which offer trustworthiness and authorization of businesses. With an appropriate certification in place, businesses seem well recognized and firms would desire to do business that is trustworthy.
Additionally, It would also help in slowly increase the standard of living of the people by providing the necessary funds to the government so that it could focus on the various developmental activities. These are the advantages of the Alternative to quickbooks Oman that is to be implemented in Oman. Now the next agenda for you would be to make your business ready for VAT implementation, and then you are good to establish your dream project and make profits out of it. We hope this article will improve your knowledge on VAT benefits.