No plan to postpone VAT implementation

ONA - MUSCAT, JULY 31 - The Ministry of Finance ruled out plan to postpone the implementation of value added tax (VAT) in the Sultanate. “The Secretariat General of Taxation is currently working on completing the administrative, technical and technological aspects in preparation for applying the tax,” a statement from the ministry said on Wednesday. It will be applied in compliance with the GCC unified agreement once it is approved, the statement affirmed, without specifying the date of its implementation. “The Sultanate will continue taking a number of financial procedures in aspects related to revenue and public expenditure in a bid to achieve fiscal balance of public finance,” the statement added. The implementation process involves the release of a proposed law apart from measures to deal with the registration requirements and processes. A total of 94 basic commodities are to be exempted from VAT and levy a tax of five per cent on the rest of goods and services including retail purchases, car sales, car rentals, hotels, restaurants, repair and maintenance. However, it is expected that the Sultanate would make foodstuff, public transport, healthcare, education and part of the housing sector, subject to a zero rate as these are considered essentials. UNIFIED DEAL Under GCC unified VAT agreement, the member states have the discretion to establish its own rules and regulations in respect of certain aspects of VAT. There may be a level of variance in application of these provision which is likely to create differences in the VAT rules and compliance requirements when comparing one GCC member state to the other. According to the statement from the Ministry of Finance, the financial measures taken have achieved positive results in controlling government spending and reducing the annual deficit in return for an increase in government revenues. A recent visit by an IMF team to consult with the government stressed on the significance of implementation of the taxes. While commenting that Oman’s economic activity was recovering, it urged the roll-out of VAT and other measures to reduce government spending. The revenue in the first five months of the current year rose by over 15 per cent to reach RO 4.72 billion compared to RO 4.091 billion during the corresponding period last year. The deficit dropped 67.3 per cent to RO 358.4 million. This is the lowest fall for the first five-month period in any calendar since 2014. The deficit stood at RO 1.09 billion in the corresponding period a year ago.