Stock Oman Muscat skyline
Buffeted by falling oil revenues, Oman will need VAT to generate sufficient revenues. Image Credit: Shutterstock

Muscat: Cash-strapped Oman is planning to introduce a 5 per cent value-added tax in April, following the lead of Gulf neighbors. Essential food items, medical care, education and financial services will be exempt from the planned levy, according to a royal decree detailing the tax.

Oman, the biggest oil exporter outside OPEC, was among the more vulnerable economies in the six-nation Gulf Cooperation Council even before it was lashed by falling crude prices and the coronavirus pandemic. Its budget deficit as a share of gross domestic product is anticipated to be among the highest in the region, according to the International Monetary Fund.

The UAE and Saudi Arabia imposed a 5 per cent VAT in 2018. Saudi Arabia tripled its tax this year.