Muscat: 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 expected 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 foodstuffs, public transport, healthcare, education and part of the housing sector, subject to a zero rate as these are considered essentials.
Under GCC unified VAT agreement, the member states have the discretion to establish its own rules and regulations in respect of certain aspect of VAT.
There may be 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.
Import of goods from outside the GCC are liable to VAT at point of entry into the state, in addition to the customs duties, if applicable; and exports of goods and services to outside the GCC shall be treated as zero rated supply.
The financial accounts of the Sultanate, according to the statement from the finance ministry, indicate that 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 Omani 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 national revenue in the first five months of the current year rose by over 15 per cent to reach RO4.72 billion compared to RO4.091 billion during the corresponding period of last year.
At the same time, data released by the government show that the budgetary deficit for the period between January-May this year stood at just 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 RO1.09 billion in the corresponding period a year ago.