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Digital tax stamps must for trade in fizzy drinks in Oman

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Effective from May 3, 2023, fizzy drinks and sweetened juices will be brought under the purview of the Oman Tax Authority’s Digital Tax Stamp System, which requires all excisable goods to be digitally tagged before they are imported and distributed within the Sultanate of Oman.

Accordingly, carbonated drinks, energy drinks, sweetened beverages and other flavoured and sweetened juices must come affixed with digital tax stamps to be eligible for distribution and sale within the country.

The move represents a new phase in the roll-out of the Digital Tax Stamp scheme, which was first introduced last year with an initial focus on cigarettes and later expanded to include shisha and other tobacco products.

Also known as digital tagging, the action is mandated by Ministerial Decision 21/2022 issued by Oman Tax Authority setting out the terms and conditions for the implementation of the Digital Tax Stamp Scheme.

“Manufacturers and importers engaged in the production, import and distribution of carbonated drinks, energy drinks and sweetened drinks, in the Sultanate of Oman, will be first required to register for the digital tax stamp system and thereafter ensure that the tax stamps are procured and placed on the respective excise products, within the timelines prescribed,” explained international professional services firm PwC in a recent advisory to clients.

According to PwC, manufacturers, importers and distributors of beverages subject to Excise Tax can start requesting the Tax Authority, effective from May 3, 2023, for tax stamps to affix on their products. About ten weeks thereafter, imported beverages bereft of the tax stamps will be barred from entry into the country, effective from July 20, 2023. A further ten weeks thereafter, local distribution of stamp-free beverages will be prohibited with effect from October 12, 2023.

Significantly, hefty penalties are liable to be imposed on traders those found in breach of Ministerial Decision 21 / 2022, PwC has warned.

“Manufacturers and importers of the respective excise products who do not comply with the Digital Tax Stamps scheme will be penalized in accordance with the penalty provisions prescribed under the Oman Excise Tax Executive Regulations (administrative penalty of RO 500 to RO 5,000). Additionally, we recommend that manufacturers and importers are ready to meet the requirements in the prescribed dates to avoid supply chain disruption,” the accounting, audit and consultancy firm stated.

Under laws that came into force in mid-2019, Oman began levying an excise tax ranging from 50 to 100 per cent on a range of merchandise, notably cigarettes and tobacco products, alcohols and spirits, and carbonated and energy drinks, among other products. The list of excisable goods was broadened in October 2020 to include a wide range of sugar-sweetened drinks, canned juices and other ready-to-drink beverages.

By introducing digital stamps – also known as digital tagging – Oman’s authorities hope to, on the one hand, clamp down on any illicit import and sale of excisable goods in the country, and on the other, ensure that the excise tax payable on these products is fully recovered in a streamlined fashion.

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