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Know Your VAT

“Know Your VAT” initiative

Zubair Small Enterprises Center has partnered with the Omani International Development and Investment Company “OMINVEST”, in organising a comprehensive program for entrepreneurs and small and medium enterprises entitled “Know your VAT”. This initiative is considered to be the first initiative from the private sector to cover new value-added tax laws and procedures towards small and medium-sized enterprises, as the initiative aims to help entrepreneurs and small and medium- enterprises to develop their businesses through guiding them to be complied with the new VAT-related legislation and preparing them to be able to have smooth progress and introduction to the new value-added tax laws.

What is VAT?

  1. There are two types of taxes – direct tax and indirect tax.
  2. VAT is an indirect tax, meaning it is not a tax that you need to pay out of your pocket.
  3. In VAT you are responsible for collecting the tax from your customers and depositing it with the Government.
  4. While depositing the VAT collected from customers with the Government, you can deduct the tax paid by you on purchases (we call it input VAT or recoverable tax or deductible tax).
  5. Thus, total VAT that you will need to deposit = tax on sales – tax on purchases (input VAT).
  6. On most of your sales and expenses in Oman, VAT will be calculated @ 5%, except:
    • + supplies covered in the list of zero-rated (specified food products etc.).
    • + supplies that are exempt (e.g., transportation of passengers in Oman.
  7. You will not be required to charge any VAT when exporting any goods or services to a person located outside Oman.
  8. On any import of goods or services, instead of the supplier located outside Oman, you will be liable to deposit VAT with the Government.