Oman to bring in 5% VAT

MUSCAT — Oman on Monday announced the introduction of 5 per cent VAT on goods and services, to offset a slump in oil prices and an economic downturn exacerbated by coronavirus.

The new tax, announced in a royal decree by leader Sultan Haitham bin Tariq, begins after 180 days in April 2021, state television said.

Certain products and services will be exempt, including rent, basic foodstuffs, school fees and public transport.

Oman recorded an average annual growth of nearly five per cent between 2008 and 2016.

But growth then dropped sharply — to 0.3 per cent in 2017, 1.8 per cent in 2018 and 0.5 per cent in 2019 — amid struggling oil production.

Oman, which is to cut oil production under the Organisation of the Petroleum Exporting Countries agreements, is the fourth country in the Gulf Cooperation Council a traditional tax-free haven, to introduce Value Added Tax.

Saudi Arabia and the United Arab Emirates were the first to introduce 5 per cent VAT in 2018, with Bahrain following in 2019.

Riyadh hiked VAT rates to 15 per cent in May 2020, in an austerity programme designed to generate extra revenue and control public spending.

Oman has recorded 106,575 cases of COVID-19, including 1,046 deaths.