Prepare for VAT, companies in Oman told

Muscat: Companies have been advised to be pro-active in their preparation for the introduction of Value Added Tax (VAT) in the Sultanate.
It had been announced that VAT would be implemented in Oman, sometime in 2019.
Accounting firm PricewaterhouseCoopers (PwC), UAE’s director Deepak Agarwal said that one of the biggest mistakes that many companies in neighbouring UAE and Saudi Arabia made was assuming that they would get more time and VAT would be implemented much later.
However, they got no such relief and a 5 per cent VAT was levied on most goods and services in the two Gulf countries, starting from January 1.
“The companies assumed that they would be given more time before VAT was implemented. They expected an announcement, saying the implementation would be delayed, but the moment never came. Companies in Oman would be well advised to fine tune the whole process and adjust to the new tax,” Agarwal said.
The PwC UAE director said that there were a few lessons that companies in the Sultanate and the government of Oman could learn from the implementation of VAT in the neighbouring countries.
“For one thing, companies should keep lobbying and seeking clarifications from the tax authorities. The more clarity you have, the better. Companies should also make sure they have an adequate level of Information Technology (IT) preparedness,” he said.
“Other challenges include administrative fine-tuning and understanding the nature of VAT. It should not be taken as just a question of finance, but one affecting many aspects, including Human Resources (HR),” he added.
Agarwal said that companies who were not adequately prepared for VAT could end up paying heavy fines. He cited the case of Saudi Arabia for the same.
“In KSA (Kingdom of Saudi Arabia), there are penalties ranging from five to 20 per cent for non-filing of returns. So, one needs to be wary. Every country is different. For instance, KSA insisted that every invoice be printed in Arabic as well, while UAE relaxed the rules in that regard. Oman, I’m sure, will have its own peculiarities and companies will have to adapt to the same,” he remarked.
VAT is applied at every stage of production of goods and increases with the value of the product concerned. Gulf Cooperation Council (GCC) member nations have long wooed workers with the promise of tax-free living. However, lower oil crude prices after the great oil price crash of 2014 meant that GCC nations had to consider other means to generate revenue. This is where implementation of VAT was mooted as a viable option.
Ends.