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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Tourists, visitors to get refunds on purchases

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With Value-Added Tax (VAT) to be introduced in six months, Oman has announced one of the keenly-awaited economic steps to boost the economy.


“Businesses which have not yet started their VAT implementation process has a short time of six months to get compliant with VAT law,” said Crowe Oman, an


auditing and accounting firm based in Muscat.


“Key areas to be affected will be sales and procurement, accounts and finance, legal and IT department for any organization,” it added.


For an average customer, it will be more of adjustments, as VAT will be charged by businesses on taxable goods and services. To start with, the standard rate of tax will be 5 percent on goods and services.


While VAT will be levied on some food items, it may be noted that basic food commodities, medicines, and healthcare services have been exempted from taxation.


School fee, sale of vacant land, certain financial services (life insurance policy)


have been also exempted.


Speaking to the Observer, Joice Mathew, head of research, United Securities, said: “As basic items - food, medicine, education expenses - exempted from VAT, the impact on the cost of living will depend on one’s lifestyle. Still, I think one can control the impact to a great extent because the VAT applied is only 5 percent.\


He added: “We are already living in low inflationary times, the prices of essential items are controlled by the government. A price increase of 5 percent on non-essential items might lead to a nudge in inflation in the initial months, but that may not be long-lasting.”


Visitors, tourists, and diplomats will still be charged VAT on taxable purchases, however, they will be able to obtain a refund based on certain conditions (depending on the type of items eligible for a refund, the minimum value for a refund to be considered). The refund scheme will only apply to people travelling to and from Oman from outside the GCC.


VAT is expected to provide additional resources to the state’s public finances in the coming years.


Meanwhile, Oman’s total revenue fell 12.4 percent to RO 4.83 billion in June due to a fall in oil prices, while the net oil revenue fell 16.3 percent to RO 2.57 billion in June 2020 compared to RO 3.07 billion for the same period the previous year.


According to the Oman Tax Authority, “VAT will provide an additional source of income for the country that will ensure the continued quality of public services. It will also help Oman achieve its goal of decreasing the country’s reliance on oil and other hydrocarbon products as its main sources of revenue."


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