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All set for VAT rollout from Friday

Cyprus-VAT
 
Cyprus-VAT
The Sultanate is all set to implement the Value Added Tax (VAT) from Friday with an expectation to raise about RO 400 million annually and to generate approximately 1.5 per cent of the value to the GDP. According to officials, all necessary preparations and requirements for the VAT implementation have been put in place including the issuance of tax-related legislations, operating the tax computer system, and electronic linking with the authorities concerned. Value-added tax is a non-cumulative tax, which is calculated at a rate of 5 per cent on the final price of a product or service provided to the consumer through the supply chain from production to the stage of the final sale of the good or service. The government had previously announced 93 basic food commodities exempted from value-added tax, but the list of these commodities was expanded to 488 food commodities within the package of social protection initiatives issued last Thursday. The items not covered under VAT are basic food commodities; medicine and medical equipment and related goods and services; education and related goods and services; financial services; undeveloped lands; resale of residential properties; passenger transport services; renting real estate for residential purposes; gold, silver and platinum; supplies of international transport and interchange of goods or passengers and the supply of related services; rescue and aid aircraft and vessels; crude oil, petroleum products, and natural gas; supply of means of sea, air and land transport for the transport of goods and passengers for commercial purposes; supply of goods and services related to transport; and supplies for people with disabilities and charities. The Tax Authority called upon all companies to register through the electronic portal of the Authority and that includes: Every person whose annual supplies exceeded or is expected to exceed the mandatory registration threshold (RO 38,500). It is permissible to register voluntarily for those who exceeded or is expected to exceed the value of their annual supplies (RO 19,250). From April 16, the taxable person must display a copy of the registration certificate in a prominent place at the headquarters of the activity, with tax identification number issued to him in the registration certificate. Regarding the penalties for violating the value-added tax law, the TA said there will be an administrative fine of not less than 500 and not more than 5,000 in the event of failure to submit tax returns by the date set for their legal submission, failure of the taxable person to display the registration certificate in a conspicuous place, failure of the taxpayer who has cancelled his registration to keep the records, accounting books and documents. Moreover, a fine of not less than 1 per cent and not more than 25 per cent; of the difference between the tax value on the basis of the real tax that must be declared and the tax value based on the previously submitted tax return, will be imposed in the event of the failure of the taxable person to declare the real tax in his declaration for any tax period, or a fine of 300 per cent of the difference in tax due related to tax evasion. Besides, there will be an administrative fine of not less than RO 1,000 and not exceeding RO 10,000 in case of refund of tax value based on incorrect documents or data, the taxable person failed to submit an application to cancel the registration from the tax in the mandatory cases specified in the law and regulations, the person who recovered the tax amount by mistake failed to pay the amount due upon him as soon as the person concerned becomes aware of the error, or in case if the taxable person fails to supply the prices of goods and services including the tax.