Oman to levy 5% VAT from next month
It is estimated that VAT will raise around 400 million Omani riyals per year.
Oman will start implementing five per cent value-added tax (VAT) from April 16, Oman News Agency reported on Sunday
It is estimated that VAT will contribute 1.5 per cent towards the country’s gross domestic product (GDP) and raise around 400 million Omani riyals (Dh3.8 billion; $1 billion) per year for the country’s exchequer.
The implementation of VAT comes in line with the GCC framework that was agreed between the six nation bloc. The UAE and Saudi Arabia levied five per cent VAT on January 1, 2018 followed by Bahrain. Saudi Arabia later hiked VAT to 15 per cent amidst shortfall in revenues due to plunge in oil prices.
A study by EY had predicted that the adoption of VAT by GCC countries would generate additional annual revenues of $25 billion.
Saud bin Nasser bin Rashid Al Shukaili, chairman of the Tax Authority in Oman, said all necessary preparations and requirements to implement VAT from April 16 have been completed.
Oman’s tax authority had opened registration process for the companies to register in the special tax system in February last year.
He explained that companies have been given the necessary time to prepare their accounting systems and other measures for tax compliance.
Source:https://www.khaleejtimes.com/business/economy/oman-to-levy-5-vat-from-next-month
Oman to offer investors long-term residency; cut income tax on SMEs
Oman is one of the Gulf’s weakest economies and was hit hard by the coronavirus pandemic and low oil prices.
Oman will reduce income tax for small and medium businesses for 2020 and 2021 and will offer long-term residency permits for foreign investors, state TV said on Tuesday.
The plans announced on state media are part of Oman’s Vision 2040 aimed at diversifying the economy away from oil, which makes up the bulk of state revenues.
Oman is one of the Gulf’s weakest economies and was hit hard by the coronavirus pandemic and low oil prices. The International Monetary Fund said last month its economy likely shrank 6.4 per cent in 2020 and estimated it would make a modest recovery to 1.8 per cent growth this year.
The measures also include income tax being reduced for companies in sectors aimed at economic diversification that will begin operating this year.
Oman will also cut rent at the Duqm Special Economic Zone and industrial areas until the end of 2022.
It said granting longer residencies for foreign investors would be done “in accordance with specific controls and conditions that will be announced later after their study is completed by the Council of Ministers, in addition to incentives related to the market.”
The cabinet also approved a long-term urban growth strategy that “is considered a key enabler for achieving Oman Vision 2040,” state TV said citing Oman’s ruler, Sultan Haitham bin Tariq Al Said.
Source:https://www.khaleejtimes.com/business/oman-to-offer-investors-long-term-residency-cut-income-tax-on-smes
UAE tax: Services provided by artists, social media influencers subject to VAT
Announcement shared in the latest Basic Tax Information Bulletin.
The Federal Tax Authority (FTA) has clarified in a bulletin that services provided by artists and social media influencers (SMIs) for consideration are subject to Value Added Tax.
The bulletin outlines that VAT applies to such services provided by artists and social media influencers that include, but are not limited to, any online promotional activities performed on behalf of other businesses for a consideration, such as promoting a product in a blog or a video or otherwise promoting a business on a social media post, any physical appearances; marketing and advertising related activities; providing access to any social media influencers’ networks on social media, and any other services that the SMIs may provide for a consideration.
This announcement was shared in the latest Basic Tax Information Bulletin issued by the FTA on the tax treatment of services provided by artists and social media influencers.
The bulletin clarified that if an artist or influencer incurs any costs in providing a service and subsequently recovers that cost from its client, such reimbursement falls within the scope of VAT in the UAE.
Source:https://www.khaleejtimes.com/business/vat-in-uae/uae-tax-services-provided-by-artists-social-media-influencers-subject-to-vat
Owner of multiple ‘sole firms’ needs just one tax registration
The UAE’s Federal Tax Authority (FTA) clarified on Monday that an individual (natural person) owning multiple sole companies is required to obtain only one tax registration for all of them, and not for each one separately.
The FTA said in a statement that a sole establishment (sole proprietorship) is a legal form of business which is 100 per cent owned by a natural person, and it does not have a legal personality independent of its owner, as the sole business and its owner are considered to be the same person.
This announcement was issued in a new public clarification regarding the VAT registration of sole establishments, which recorded a 1.3 per cent surge to 304,948 at the end of January month-on-month, reflecting the robust activity of the sector, which recently attracted many investors from both inside the country and abroad.
The National Economic Register’s recent figures show that relevant authorities issued over 4,000 new licences for sole establishment around the country in January 2021.
According to statistics, sole proprietorship account for nearly 41 per cent of total commercial licences of 740,717 at the end of January.
Abu Dhabi, Dubai and Sharjah account for 78.6 per cent of the total sole establishments operating in the country.
The FTA clarification on tax registration seeks to educate people with the aspects of the tax rule which need simplified explanations, “enabling them to apply the tax principles accurately and efficiently,” the tax authority said.
The FTA clarified that the sole proprietorship rule does not apply to a One-Person Company LLC or other similar legal entities, which are seen as “distinct and separate legal persons” from their owners (unless the applicable legislation treats such entity and the natural person as the same person). For the avoidance of doubt, it should be noted that a legal person (e.g. a company) cannot own a sole establishment.
In certain cases, tax registrations by taxpayers are reviewed with regards to sole establishments and such persons will be informed of the corrective measures to be taken, if needed, the FTA explained.
The tax authority noted that the taxable supplies made by a natural person, in addition to his sole establishment(s), must be considered collectively in order to determine whether the person exceeded the mandatory VAT registration threshold of Dh375,000.
The FTA said the registrant must inform the FTA of any undeclared output tax by submitting a voluntary disclosure in accordance with Federal Law No. 7 of 2017 on Tax Procedures, for example where the registrant disregarded any of his sole establishments or taxable supplies made in his personal capacity for VAT purposes. “This includes instances where a person failed to register for VAT on the basis that the mandatory VAT registration threshold was not exceeded on a stand-alone basis by that natural person or his sole establishment(s).”
A natural person is also required to notify the FTA if it failed to register for VAT and take the necessary corrective action to account for any outstanding dues.
Source:https://www.khaleejtimes.com/business/local/owner-of-multiple-sole-firms-needs-just-one-tax-registration