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Value-added tax popularly known as VAT is an indirect tax that is levied on the supply of goods and services. It has been implemented in more than 160 countries and on 16th April,2021, Oman will join the league of countries that have implemented VAT. The VAT being a new system, it is important for businesses to understand the concept of VAT and how the system works.
VAT is a general consumption tax that is levied on taxable goods and services that are bought and sold in Oman including the import of goods and services. It is levied and collected at every stage of the supply chain right from the manufacturer’s purchase of raw materials to a retailer’s sale of an end-product to a consumer. Since it is an indirect tax system, the registered businesses act as agents to levy, collect and remit the tax to the authorities.
|VAT Rate Structure|
Under the VAT system, tax is levied tax levied on value addition in each stage of the supply chain. This is achieved through the concept of input VAT deduction, which allows the business to set off the VAT paid on purchases (Input VAT) with the Vat collected on the sales (Output VAT). Let’s understand how Vat system works with an example.
When you look at the above example, the total Vat paid by all parties (Ace metal Supplies LLP 150 + Eco Cars LLP 15 + National Distributor LLP 20 + Favorite Cars LLP 15) is 200 which is the same amount paid by Mr Ali on purchasing the car. This tells us that:
In Oman VAT, not all supplies are levied with a VAT rate of 5%. The Vat laws allow certain notified supplies to be levied with zero-rated VAT and some are exempted. Read “ VAT Rate in Oman’ to know the tax structure.
Read more about Oman VAT
Introduction to Oman VAT, VAT Rate in Oman, Who Should Register Under Oman VAT, VAT Registration Guide in Oman, Business Benefits of Voluntary VAT Registration, How to Calculate VAT in Oman?, What are the Taxable Goods and Services Under VAT in Oman?, How does VAT affect Omani businesses?, Stay VAT Compliant with TallyPrime’s Amazing Capabilities, What Are the Benefits of Applying VAT in Oman?, How is Introduction of VAT going to Affect Oman Economy?, VAT Invoice in Oman, Exempt Supplies in Oman VAT, Zero-Rated supplies in Oman VAT, VAT Registration Deadline in Oman