Crowe workshop focuses on need to embrace VAT

Business Tuesday 06/November/2018 15:10 PM
By: Times News Service
Crowe workshop focuses on need to embrace VAT

Muscat: Gear up, plan ahead and simplify value added tax (VAT) was the theme of the workshop organised by Crowe Mak Ghazali last Wednesday at the Crown Plaza hotel.
“The introduction of VAT has become more certain now with the announcement that VAT is likely to be effective from September 2019,” said Davis Kallukaran, Managing partner, Crowe Oman.
Welcoming delegates to the workshop, Kallukaran emphasised on the importance of embracing VAT and asked businesses to start preparing for the new law. He insisted that corporates must equip themselves with competencies to enable them to face the challenges and complexities of VAT.
The session on VAT was conducted by Aastha Rangan, Director VAT advisory at Crowe. “VAT is a tax on the final consumption of goods and services, which is indirectly charged on a taxable vendor on their sale of goods and services. The vendor is allowed to take VAT credit on purchases and hence the net impact on vendors is nullified. Hence, businesses should understand the fact that they are the ‘tax collectors’ for the government.”
If they do not do it correctly, they will have to pay penalties stated in the local VAT law, she continued. Later, Antony Kallukaran focused on the systems integration and IT enhancement needed for VAT implementation and emphasised that corporates must start preparing well in advance.
As per the framework agreement, all goods and services are subject to 5 per cent VAT. However, VAT will either be zero rated or exempt for education, health, real estate and local transport. It also gives options to member states to zero rate the oil, petroleum derivatives and gas sector. The Ministry of Finance recently stated that VAT will be not imposed in the health, education, part of the housing and logistics sectors and 94 food items in Oman.
Markus Susilo, Partner in charge of Crowe’s UAE VAT practice, while addressing the workshop, said, “The typical query from most businesses is what would be the basis of starting with the implementation of VAT if laws are not yet made public?”
VAT is already implemented in 160+ countries in the world since its first introduction in the 1950s and they have similar concepts among each other. Guidelines have been outlined in the GCC VAT Framework Agreement and they are in line with the concept of the other non-GCC jurisdictions with VAT.
Businesses should take a proactive approach and plan way ahead in implementing VAT using the available sources rather than awaiting the last moment to start. Taking experiences from the implementation of VAT in the other non-GCC countries, businesses require between 12-18 months for implementation. This was the case even in jurisdictions where similar taxations were in place prior to the introduction of VAT or GST, Susilo added.
M.K Sreedhar, tax councillor for Crowe, was the lead faculty for the tax workshop on tax updates and withholding tax. Ramya Annadhurai, Director Tax services at Crowe, lead the participants through various tax issues and case studies. The workshop was largely attended by key professionals from esteemed business groups, as well as officials from the Ministry of Finance income tax department.