Oman introduced a 5 percent value-added tax (VAT) on Friday, the fourth Gulf Cooperation Council country to implement a so-called consumption tax.
It followed the UAE, Saudi Arabia and Bahrain. Saudi Arabia tripled its VAT rate to 15 percent last July to help fund its coronavirus relief efforts.
Oman has predicted it will raise OMR400 million ($1.04 billion) from the tax this year, equivalent to 1.5 percent of GDP, as it looks to narrow a widening fiscal deficit.
In June 2016, all six GCC states signed the Common VAT Agreement, pledging to introduce a 5% VAT rate. Kuwait’s parliament has pushed back the implementation date several times but the International Monetary Fund said last year that it expects it to be introduced by 2022. Qatar is expected to go ahead with VAT in the second or third quarter of this year and is said to be close to finalizing its tax administration system, Dhareeba.
Omanis had 6 months to prepare for the introduction of VAT, which may be followed by the Gulf’s first income tax in the coming years.
Goods and services exempt from VAT include financial services, health care, education, local passenger transport, bare land, resale of residential real estate and residential rents. Zero-rated goods and services include all exports, basic foodstuffs, medicine and medical equipment, investment in gold, silver and platinum, crude oil and derivatives and natural gas, among certain transport goods.
Source- Arab News
