Oman Excise Tax Law Issued by Royal Decree
Oman has introduced their Excise Tax Law on 13th March 2019, issued by His Majesty Sultan Qaboos bin Said by Royal Decree 23 of 2019. The tax will take effect within three months of its official publication, which publication is expected within six months of the effective date of the Law.
The initiation of Excise Tax in Oman follows the recent application of the tax in neighboring Gulf Cooperation Countries (GCC), including UAE, KSA, Bahrain and Qatar. Saudi Arabia was the first country to initiate the tax in June 2017, followed by the UAE and Bahrain later that same year covering products including cigarettes and soft drinks. Qatar implemented similar taxes in January 2019, adding pork and alcohol to those items covered. Kuwait has not implemented any excise tax as yet however, its draft law mentions that goods including tobacco, energy drinks and soft drinks, may be subject to tax.
The primary purpose of The Oman Excise Tax Law is to apply tax on products which are deemed detrimental to health or the atmosphere, and is expected to include the following products:
- Tobacco, alcohol, pork products and energy drinks which shall be charged an excise tax rate of 100%.
- Certain soft drinks shall be charged an excise tax rate of 50%.
The introduction of Excise Tax brings a significant change for all businesses that import, manufacture or trade in Excise goods in Oman. In an article published in The National on 14th March 2019, ‘The selective tax could add at least OMR100 million (Dh950m) to the government’s funds every year, said Saleh bin Said Masan, head of the economic and financial committee at the Shura Council, in November 2018.’
Once the Excise Tax Law is implemented, business entities importing, manufacturing or trading in excise goods in Oman shall be required to assess the impact of these regulations on their pricing decisions regarding the products concerned. Further Excise Tax developments, including additional requirements, should be closely monitored once the Excise Tax Executive Regulations and other guidelines are published, in order that proper implementation is observed.
The Excise Tax Law is expected to prove beneficial for the Oman economy and follows the intended implementation of Excise Tax across the GCC.
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