THE IMPACT OF VALUE ADDED TAX ON CONSUMER BEHAVIOR IN OMAN

Abstract

The Value Added Tax (VAT) is a type of indirect tax that is imposed on goods and services. The VAT is considered with all other forms of taxes in many countries, the most important source of income. The Value Added Tax is directly aimed to be collected from consumers. The VAT is a tax on consumption applied at a basic rate of five percent, to be imposed on goods and services in the Oman. The Oman has imposed Value Added Tax (VAT) on a selected set of products and services on 16 April, 2021 as per 2016, GCC unified VAT Agreement. In this study tried to explore if consumers in Oman are aware of VAT, and to explore their possible react when VAT is introduced. The researcher searched into literatures that could support the study, distributed a questionnaire to collect data. A statistical analysis method was chosen, utilizing IBM, SPSS and MS Excel to analyze data collected and presents study results. The study concludes that consumers in Oman have a moderate knowledge to VAT, hence the study recommends that governments need to do more awareness campaign on VAT. The next aim of the study was to examine if VAT will impact consumers, the results from the study confirmed that, and recommended to minimize that effect, by reducing VAT rate, expand goods and services which are exempt from VAT and supporting consumers with low income. Purpose: To identify the consumers awareness level of VAT in Sultanate of Oman, examine the expected VAT impact on consumers and identify possible VAT influence on consumers spending’s & savings habits. Research Methodology: The Research Methodology of this research is explained in this research paper in details. The Techniques and process of sampling, instruments and tools of collecting data, and how this data was analysis and designed to serve the aim of the study. Results: The concept of Value Added Tax (VAT) is new for Oman, which was a major challenge, to find a proper and needed literature to support the research. The VAT has implemented yet during the research, therefore all responses from participants were provided based on their expectation after the imposing tax, without the actual experiment. In view of this it is essential to do more future studies on the topic under more convenient circumstances.