What Is The VAT Impact On Precious Metals Sector In Oman?
The implementation of VAT in Oman is certainly going to impact the various sectors of the economy in different ways. On 16th April 2021, the country approved the implementation as effective and published the VAT law. Aligned with the unified GCC VAT Agreement, the government would be charging a value-added tax of 5% on the sale of goods and services. However, certain essential goods have been declared as zero-rated, which implies that the buyers would not have to pay any VAT for though. The details regarding VAT for Precious Metals sector in Oman are of great importance to investors or individuals involved in businesses of such metals.
Is it necessary to pay VAT for precious metals?
Although Oman has exempted only a limited number of goods from VAT, a majority of the essentials are VAT-free. This is indeed good as the imposition of VAT on essential can cause the market prices to rise. This would have resulted in an increased cost of lifestyle and made it difficult for the commoners to afford food and other essential items. The VAT for Precious Metals sector in Oman, however, is applicable to jewellery as it happens to be a luxury item. Individuals purchasing jewellery or other items made of precious metals would have to pay a value-added tax of 5%.
Would the VAT for Precious Metals sector in Oman impact sales?
As mentioned earlier, luxury items are not exempted from VAT in Oman and commodities made of precious metals mostly fall into this category. This may or may not result in a rise in the market prices of these metals. Here are a few trends that are now likely to emerge:
- If the jewellery manufacturers decide to attract sales by offering their products at ‘VAT-free prices’, they would keep the costs unchanged and compensate by reducing their profit margins.
- However, if they do not want to compromise on profit, they would raise the market prices by adding 5% VAT to the old prices.
- According to the experts, sales of gold and silver jewellery would remain unhindered even if the market prices go up. Similar to VAT for Precious Metals sector in Oman, many other nations charge VAT on gold and silver too. However, none of these countries has witnessed people giving up purchasing due to the taxes.
- Gold is a highly prized and coveted asset. It carries great value across the world and is a sort of safe investment option. As a result, people would continue to purchase jewellery and other items made from precious metals.
The supply of gold, platinum and silver for investment, however, has been declared as zero-rate. Thus, the laws regarding VAT in Oman exempt gold bullions and other metals purchased as a form of investment.
The implementation of VAT makes Oman the fourth GCC nation to do so. The economy of Oman is struggling to recover from the losses inflicted by the pandemic. At such a time, the VAT for Precious Metals sector in Oman, along with that on the other sectors would help to support the economy.