Dubai: Oman has become the fourth Gulf state to implement VAT, with a flat 5 per cent being imposed on a range of goods and services from Friday, April 16.
The other economies to have done so are the UAE, Saudi Arabia – which last year raised its VAT rate to 15 per cent from 5 per cent – and Bahrain.
Oman expects 400 million riyals in additional revenues for the state exchequer via the tax, equivalent to 1.5 per cent of the country’s GDP. The receipts will come in handy as the Gulf state tackles budget deficits that have widened as a result of the pandemic hit to the economy.
Oman had in place a six-month transition period before the VAT came into effect. But categories such as essential foodstuff will be rated at 0 per cent VAT.
UAE has had a VAT regime since January 1, 2018. In the recent past, top Ministry officials have said that there are no plans to raise the VAT rates.