50pc excise tax on malt drinks, non-alcoholic beer

Muscat: Malt drinks, non-alcoholic beers, ready-to-drink coffees and teas, and beverages containing artificial sweeteners are among a wide array of products that are liable to 50 per cent Excise Tax when the new levy comes into force in the Sultanate on October 1, 2020.

Barring a few exceptions, potentially hundreds of different types of sweetened beverages and their variants will be brought under the purview of the new levy – part of an effort by member states of the Gulf Cooperation Council (GCC) including Oman to disincentive excessive consumption of products deemed potentially harmful to health.

“The base for excise tax in Oman is steadily expanding,” announced KPMG Oman, a well-known provider of tax, audit and advisory services. “The Oman Tax Authority has increased the rate of excise tax on alcoholic beverages from 50 per cent to 100 per cent, effective from July 1, 2020, and also announced the introduction of excise tax on sugar sweetened beverages with effect from October 1, 2020,” it said in an advisory to clients.

Introduced with effect from June 15 last year, Excise Tax – sometimes referred to as ‘Sin Tax’ because it primarily applies to goods deemed harmful to health – was imposed on alcoholic beverages, carbonated drinks, energy drinks, pork and pork products and tobacco and tobacco products.

Legislative amendments by the Tax Authority vide Decision 34/2020 have since expanded the scope of the tax to include sweetened drinks at the rate of 50 per cent from October 1, 2020, according to KPMG.

Decision 34/2020 defines sweetened beverages as any drink in which sugar, sugar derivative or other sweetener has been added. Included in this definition are concentrates, powders, gels,

extracts or compounds to which sugar, sugar derivative or other sweetener is added and which can be converted into a sweetened beverage.

In particular, fans of malt drinks and packaged coffees and teas – of which there are legions in Oman and the Gulf region – will be disappointed to learn that their favourite beverages will be pricier with effect from October 1.

KPMG’s advisory explained: “The Schedule to Decision 34/2020 clarifies that juices, sport drinks, barley drinks (malt drinks and non-alcoholic beer), ready to drink/packaged coffee and tea and artificially flavoured powders and concentrates (capable of being converted into beverages) that contain sugar, sugar derivative or other sweetener, unless eligible for exclusion, are examples of sweetened beverages liable to excise tax.”

Furthermore, beverages containing natural and artificial sweeteners are also subject to excise tax, according to the firm. Citing Decision 34/2020, it noted that sugar, sugar derivatives and other sweeteners, in the context of sweetened beverages, include sucrose, glucose, fructose, lactose, galactose, coconut sugar and sugar cane.

Also falling under the ambit of the tax are beverages sweetened with sugar substitutes like stevia, saccharine, neotame, sucralose, aspartame, erythritol and acesulfame potassium, KMPG stated.

However, the decision exempts several categories of drinks and beverages from the purview of the new levy. The list covers: Natural fruit and vegetable juices; Milk and milk substitutes; Ready-to-drink beverages containing at least 75 per cent milk; Ready-to-drink beverages containing at least 75 per cent milk substitutes; Artificial baby milk, baby formula or baby food; Beverages intended for special dietary/nutritional needs; and Beverages intended for medical needs

“According to Decision 34/2020, milk substitutes include a drink used for all or most uses of milk as a milk substitute, has consistency similar to milk, contains 120 gm of calcium per 100 ml, and is extracted from legumes, pulses, nuts, seeds or any other type of plant, but does not contain aerated substances,” KPMG added.