What is VAT: Value-added tax widely known as VAT is an indirect tax that is charged on the supply of goods and services. It has been executed in more than 160 nations and on April 1st, 2021 Oman will join the association of countries that have executed VAT. The VAT being a new system, businesses need to know the concept of VAT and how the structure works.
VAT is a universal consumption tax that is imposed on dutiable goods and services that are accepted and sold in Oman together with the import of goods and services. It is charged and collected at each phase of the supply chain right from the producer’s purchase of raw materials to a vendor’s sale of an end-product to a customer. As it is an indirect tax system, the listed businesses act as mediators to charge, accumulate and remit the tax to the authorities.
How does VAT System work?
The tax is charged on value addition in every phase of the supply chain. This is attained through the perception of input VAT deduction, which permits the industry to set off the VAT paid on procurements known as Input VAT along with Vat collected on the sales know as Output VAT. Let us understand the tenure of VAT Filing
- Businesses functioning with more than a certain threshold must file the VAT return once-a-month.
- Businesses functioning with less than a certain threshold must file the VAT return quarterly.
The Ministry of Finance in Oman may choose to outline a diverse tax filing period for particular businesses that fail to meet the terms. This may lead to fines or penalties.
Importance of collecting VAT for Oman Government
It benefits the government to produce adequate income for the smooth operations of public segments. It also assists in reducing the dependency on the oil capitals of the country. This is mainly an enhanced substitute to just trusting on natural reserves of the nation.
Does everyone pay VAT?
Certainly not, meanwhile, there are few exemptions declared by the government where individuals or companies are not necessary to pay VAT. In case, in real estate, the materials for commercial building are VAT applicable; but, the materials of residential building are VAT exempted. There is a distinct unit of “Zero Rated Supplies” which clarifies the whole lot about VAT exemptions.
TallyPrime manages your business by helping a transit to VAT regime and smooth functioning of your business.