Companies can pay VAT on behalf of customers in Oman

Muscat: Businesses in Oman can fully or partially cover the value added tax (VAT) their customers are required to pay, according to an official from the Tax Authority.

“Institutions, shops, and/or merchants have the freedom to choose to bear the value added tax, which is determined at five per cent for taxable goods, instead of the customer bearing this cost, whether it is the entire amount, or just a part of the tax,” he said.

“There are no penalties for institutions, shops and merchants that choose to bear this tax,” he added.

“The matter of bearing the tax, and how much is to be borne, is a decision made by the owner of that particular establishment.”

The Tax Authority called on people in the country to familiarise themselves with the goods and services not included under tax, or subject to zero percent taxation, so that they are fully aware of how VAT affects their spending power.

The official also confirmed that shops are well within their rights to put up lists of items that mention their prices both before and after the tax came into effect.

His response came after many on social media called on business owners to put these up so customers know how much they need to pay. VAT has been in place since Friday, April 16, 2021.

Dr. Mohammed Al Wardi, an economic analyst in the country, called on banks and other financial institutions to bear the costs of VAT for services provided to customers during the challenging times brought about by the ongoing economic effects of COVID-19.

“We hope that banks and financial service organisations bear the tax their customers have to pay, so that they can gain their loyalty and trust,” he said.

“With the implementation of VAT and the removal of subsidies on electricity and water, inflation is expected to rise. However, there is also a predicted decline in purchasing power, owing to the impact of the coronavirus, the cancellation of bonuses for government employees, and compulsory retirement for some of them. This will slightly reduce the rate of increased inflation.”

Adding to this, Dr Hesham Magd, the head of the Faculty of Business and Economics, at the Modern College of Business and Science, said on the effect of VAT on people’s purchasing power, “Some of them will feel the impact of value added tax on them, but even then it is far lower than in other countries. ”