The Sultan of the Sultanate of Oman issued a decree to start imposing a 5 percent value-added tax within six months, in an effort to boost revenues that have been severely affected by the drop in oil prices and the Coronavirus pandemic. Taxes will be imposed on most goods and services, with some exceptions.
According to the Omani government, the application of the value-added tax came to ensure the financial sustainability of the Sultanate, enhance its competitiveness, reaffirm its commitment to international and regional agreements, and improve the business environment. In 2018, all the six Gulf Arab states agreed to introduce a value-added tax of 5 percent, after a sharp drop in oil prices that affected their revenues. The Kingdom of Saudi Arabia, the United Arab Emirates and the Kingdom of Bahrain have already applied the tax, while the Sultanate of Oman, Kuwait and Qatar did not implement the tax so far.
Facing an economic contraction of 2.8 percent this year and a ballooning deficit in the government budget of 16.9 percent of GDP, according to the IMF, the Sultanate has reduced public spending to contain the financial decline resulting from lower oil prices and economic decline due to the general isolation measures related to the Coronavirus. The Sultanate of Oman recorded a deficit of 826.5 million riyals ($2.15 billion) in the first six months of this year, an increase of 25.1 percent in the deficit on an annual basis.
Source (Al-Arabiya.net, Edited)
