Oman prepares for impending VAT sales tax
A Sept. 27 report shows the country of Oman is going to have to change aspects of administration in its customs department to handle VAT collection processes around imports.
There will also be a skills crunch as the countries which are impacted try to train professionals for tax management -- which, while it may add jobs, also adds some instability into the financial system.
Oman and other countries are working on draft legislation to get behind the eight ball when it comes to preparing for the value added tax.
They're categorizing businesses and building principles to implement the new tax effectively. The advent of a VAT may also take a toll on the nation's IT systems.
"The most important thing is the information technology system,” Ashok Hariharan, partner and head of tax at KPMG, said in a press statement. “The VAT regime, unlike corporate tax, will involve the filing of tax returns on a monthly basis or possibly on a quarterly basis."
All of those additional tax returns will require more work on the part of human preparers, and more of a burden on the IT systems designed to document realities under a VAT tax regime.
For more, Gulf News Journal spoke with Jason Fink. Fink is a professor of economics at James Madison University in Harrisonburg, Virginia.
“One effect of a sales tax such as the VAT is that it provides a disincentive toward consumption rather than work,” Fink said. “So one can argue that it is in a way more efficient than introducing or increasing income taxes.”
At the same time, he said, the VAT is considered a hidden tax in many ways, which can lead to criticisms that it introduces higher taxation through the back door.
“Others object to the VAT as being a bit too stealthy, in the sense that the consumer doesn't always explicitly see the amount of the tax being paid,” Fink said.
One other outcome of the VAT is its potential effect on the “business rating” of Oman and other implementing countries. Published guides going over VAT and other tax status info show that companies take the existing tax burdens of national economies very seriously.
Some guides, which have not yet been updated to reflect the change, do hint at the future implementation.
“There is currently no VAT or similar tax system in Oman," according to an international business guide maintained by PriceWaterhouseCooper. "However, given the need for diversifying government revenues, a potential introduction of a VAT system has been considered by the Gulf Cooperation Council (GCC)
Local officials have called for implementation in 2018.