An insightful primer issued by the Secretariat General of Taxation (SGT) on the scope and applicability of the new Excise Tax on select goods, due to come into force from June 15, 2019, provides further clarity on the definitions of products subject to this new levy.
Tobacco products and their derivatives subject to 100 per cent Excise Tax shall include any products that fall under Chapter 24 of the ‘Unified Customs Tariff of the GCC States’, according to the SGT. These products shall include, but are not limited to, cigars; cigarettes; cigarillos; water pipe tobacco; and other tobacco products.
Carbonated drinks, which shall attract a 50 per cent Excise Tax, are described as any aerated (fizzy) beverage except unflavoured carbonated water. “This includes, for example, carbonated water with added sugar or other sweeteners or flavours such as cola and soda derivatives.
The carbonated drinks category for Excise Tax purposes also covers concentrates, powder, gel, or extracts intended to be made into a carbonated beverage. Energy drinks and drinks containing alcohol will not be considered as carbonated drinks, even if these beverages are carbonated,” the SGT stated in its explainer.
As for the applicability of the tax to concentrates, the tax authority explained: “In case of a concentrate supplied to a retailer to transform it into a carbonated drink (for example, bag-in-box concentrates) and has already been subject to Excise Tax in Oman, the drink which is made from that concentrate would not be considered an Excise Good and consequently would not be Taxable at the point of retail sale.”
Significantly, mineral water that is aerated and flavoured is subject to Excise Tax. However, unflavoured mineral water will not considered as an Excise Good, even if the mineral water is aerated. Similarly, if the mineral water is flavoured, but is not aerated, the mineral water is not considered an Excise Good, it explained.
Energy drinks, which attract a 100 per cent levy, are described as “beverages that are marketed, or sold as an energy drink, containing stimulant substances that provide mental and physical stimulation”.
“Such substances can include caffeine, taurine, ginseng and guarana, but could also include other substances that have an identical or similar effect. This also includes any concentrates, powder, gel or extracts intended to be made into an energy drink,” the tax authorities further noted, adding that energy drinks made from concentrates that are already subject to Excise tax will not attract a further tax.
Also subject to the new tax are ‘special purpose goods’, notably alcohol and pork products, which attract a 100 per cent levy with effect from June 15.
The implementation of Excise Tax stems from the promulgation of the National Excise Tax Law issued by His Majesty the Sultan via Royal Decree 23/2019 on March 13, 2019. The Law was officially published in the Official Gazette on March 17, 2019.
It comes into effect on June 15 —ninety days from this date. The Law allows six months from the date of publication of the Decree Law for the publication of the Executive Regulations.
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