Experts say Saudi, UAE VAT won’t impact Oman

Muscat, Jan 2 - The Valued Added Tax (VAT) introduced in Saudi Arabia and UAE will not have any serious impact on Oman.

According to experts in Oman, no VAT will be charged on the sale of goods transported across the border from one GCC state to another.

While VAT will be implemented in the Sultanate from 2019, ‘Selective Tax’ will be introduced from the middle of next year. Law for VAT is currently under preparation.

Companies in Oman will need some time to ensure its execution as the draft is still being prepared by the government.

The government said an exemption will be made on some goods and services as per the agreement with the GCC countries.

Meanwhile, the International Data Corporation (IDC), in its Quarterly Mobile Phone Tracker, has said the region’s mobile phone market is already in a state of flux.

IDC’s latest tracker showed that overall shipments rose just 0.1 per cent quarter-on-quarter in the

first quarter of 2017 to 6.4 million units.

Smartphone shipments declined - 4.9 per cent over the same period. The scenario could have been even more perilous had the decline not been offset by a 13 per cent increase in feature phone shipments across the GCC.

The report said IDC expects the introduction of VAT to have a negative impact on smartphone shipments to the UAE and Saudi Arabia in the first half of 2018.

These two markets are set to see a combined -10.1 per cent decline compared with the same period of 2017.

VAT will have a significant negative impact on cash flows, at least in the initial stages while confusion reigns over VAT recovery.

As there’s already limited credit in the sector, distributors would not want to take risks that will constrain their cash flows at a time of uncertainty.

Vinod Nair