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Oman - Excise tax, VAT, Withholding tax updates as well as Oman Budget 2019

KPMG in Oman provides updates on the introduction of a Selective Goods Tax on certain specified goods considered harmful to human health and environment and certain luxury goods, updates on VAT implementation and Withholding tax as well as the Budget 2019.

Excise tax update:

Oman is on the brink of introducing a law on ‘Selective Goods Tax’, also referred to as the ‘Excise Tax’ primarily aimed at imposing tax on certain specified goods considered harmful to human health and environment and certain luxury goods. According to recent media reports1, the Majlis A’Shura and State Council have approved the draft law on Selective Goods Tax and representatives of the Ministry of Finance have announced that excise tax will be implemented in early 2019. According to the representative of the Ministry of Finance, Excise Tax is likely to be levied on alcohol, tobacco products, carbonated drinks, energy drinks, pork and certain luxury goods.

VAT update:

According to the media reports, the Ministry of Finance has confirmed preparations to target VAT implementation in Oman for September 2019, though the actual date of enforcement is currently under review.

Withholding tax update:

Under the Oman tax laws, as per the amendments introduced in February 2017, withholding tax (‘WHT’) applies on payments towards services to offshore service providers. KPMG Oman has assisted companies in seeking specific clarifications from the Oman tax authorities on applicability of withholding tax on several payments.

Recently, KPMG assisted in seeking clarification on payments made to foreign travel agents (‘FTAs’) wherein Oman tax authorities clarified that reimbursement towards airfare charges would not be subject to WHT in Oman. Further, in respect of payments reimbursed to foreign group entities, without any profit element or mark-up, towards expenses such as travel, accommodation, etc. incurred by such entities on behalf of an Omani company, the Oman tax authorities have clarified that such payments would not be subject to WHT in Oman. The authorities have also clarified that WHT would not be applicable on director’s remuneration and sitting fees paid to foreign board directors whose name is mentioned in commercial registration papers of the company. The above clarifications are provided by Oman tax authorities to companies on a case-to-case basis.

Oman State Budget 2019:

On 1 January 2019, Oman revealed its 2019 budget. Total projected spending will amount to 12.9 billion Omani Rials, an increase of 3% against the previous year budget. Revenues are estimated at 10.1 billion Omani Rials, leaving a budget deficit of 2.8 billion Omani Rials, which will be 9% of the projected GDP. GDP is budgeted to grow at a rate of 3%. This year’s budget is based on an oil price of US$58/bbl, which is higher than the price at the end of 2018 which was US$53/bbl and lower than the average realized price of oil which was US$68/bbl at the end of November 2018. Please refer to the link for KPMG’s comprehensive analysis of the budget - Analysis of Oman’s 2019 budget

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