MUSCAT, DEC 30 – The proposed Value Added Tax (VAT) in the neighbouring UAE and Saudi Arabia will have a positive impact on Oman’s trade and commerce scenario, according to finance experts. However, there will be some price hike on branded products which are sold Pan-Arab as they need to be at par with regional prices, they said. “The Value Added Tax to be levied on goods and services in the neighbouring countries with whom Oman has import, export and transshipment relations, will help Oman businesses to learn from UAE VAT implementation experience and be better prepared for implementation of VAT law next year”, says Amit Tandon, Group Chief
Financial Officer, Khimji Ramdas Group.
He further said that although imports from UAE to Oman will be at Zero-VAT rate now, the UAE VAT will not be adding to any extra cost for Oman. On the other hand, it will significantly help in streamlining cross-border transactions between the two countries and reducing illegitimate trade.
However, David Crickmore CEO Amouage feels that there will be slight increase in prices of branded products which are sold across the region in Oman.
“Considering that VAT will be launched in Oman at some time in the near future we are told, we are ready and have already increased our prices to be the same as the UAE new prices since we cannot sell at different prices in the Gulf”, Crickmore said.
He hoped there will be considerable impact on the tourism revenue which is a major GDP driver.
“The main impact will be on tourist business, especially for a country which relies totally on tourism to keep it functioning. The Euro and £ Sterling have dropped by 20 per cnt due to various geopolitical factors and this has already made prices no longer advantageous.”
He said VAT can cause price hike and for European tourists, prices are already too high and having natural tourism attractions can only increase Oman’s chances of becoming one of the most desired tourist spots in the world.
“Oman relies less on tourists and we expect the 6 per cent VAT increase to have less effect on the trading patterns. It will, of course, take time to implement and for consumers to get used to it. There will undoubtedly be complaints initially, it the government needs the revenue in light of the drop in oil prices and a very costly public sector.”