May 15 – With the current Valued Added Tax (VAT) rate in the Gulf countries relatively low compared to the global average of around seven per cent, any negative impact will be limited and can be managed, said a top economist from Sultan Qaboos University (SQU).
Speaking at a forum on VAT today, Dr Nasser al Mawali, assistant professor of economics, Department of Economics and Finance, SQU, said, “Some preliminary studies have pointed out that the imposition of a five per cent VAT in the GCC is expected to generate revenues of 1.4 per cent of the GDP in the Sultanate and Kuwait, 1.6 per cent in Saudi Arabia, 1.5 per cent in the UAE and 0.8 per cent in Qatar.
He added that the decision to impose VAT in Oman has become a necessity dictated by the economic challenges in light of the decline and fluctuation of international oil prices.
Mawali said that there has been gradual decline in the contribution of the oil sector in GDP. In 2016, the contribution of the oil sector was 27 per cent due to decline in oil prices and the cut in oil production.