Companies in Oman should take action to prepare for Value Added Tax

Muscat: Companies should take action now to prepare for Value Added Tax and Excise Tax, urged Price Waterhouse Coopers, (PwC)after the Gulf Cooperation Council Ministers of Finance approved in principle both treaties last Thursday.
“Some administrative matters still need to be resolved, notably with regards to the tax collection mechanism related to intra-GCC trade. The GCC Committee has been tasked to provide its recommendation by the end of summer in view of the formal announcement of the treaties,” the PwC statement added.
The Excise Tax and VAT treaties constitute the common framework for the introduction of these taxes in the GCC which is expected to occur by 1st of January 2017 and 1st of January 2018, respectively.
The treaties will form the basis for the issuance of national VAT and Excise Tax legislation by each GCC Member State.
“The introduction of VAT and Excise Tax constitute an important policy reform aiming to help GCC Governments achieve medium to long term social and economic policy goals, and reduce reliance on hydrocarbon revenues,” Jeanine Daou, Middle East Indirect Taxes Partner, said.
“Approval of the treaties is an important development as it sets out common principles that will guide the application of VAT and Excise Tax at a national level by each individual Member State. Companies should take action now, if they have not already, to prepare for the implementation of the new tax systems and be ready by go-live date,” Daou added.
Upon the ratification of the treaties, each member country will need to issue its own national VAT and Excise Tax legislation based on the agreed common principles.
This will entail the issuance of national VAT and Excise Tax laws along with the implementing regulations in accordance with each member country’s national legislative process.
In Oman, economists have said that the Omani government hopes to earn revenues amounting to 1.4 per cent of its gross domestic product (GDP) annually through VAT.
Earlier in January, a top member of the Majlis Al Shura’s Economic Committee had told TOO that the tax will be introduced in Oman by the middle of 2017 or even earlier.