Oman has postponed implementation of the value added tax (VAT) until 2019, reported the Oman TV quoting sources at the Ministry of Finance. The statement, however, said the ‘selective tax’ will be implemented from the middle of next year.
The Budget 2017 had mentioned introducing a ‘selective tax’, concurrently with GCC countries, on some commodities such as tobacco, alcohol and others.
It had said that due to the continued lower oil prices, “the government pursued a gradual fiscal adjustment policy to face a sharp fall in revenues. The aim of such a policy is to minimise its impact on economic and social aspects”.
As per the International Monetary Fund estimates, VAT could generate 1.5 to 2 per cent of GDP (or 2.5 to 3.5 per cent of non-oil GDP) in the GCC even with relatively low rates.
In its report on tax reforms in the region, IMF said GCC countries should choose a combination of modern efficient tax instruments. “These could be based on a low rate broad-based VAT tax together with selected excises, a business profits tax, and possibly a recurrent property tax. The combination of these taxes can ensure efficient and progressive tax systems in the region. Taxes should be at low rates with limited exemptions, with the aim of collecting revenues in line with country budget needs and constraints,” said the IMF.
IMF said the VAT is an ideal revenue instrument for the GCC countries.