Muscat: Oman’s law for the value-added tax (VAT) is still being worked on, according to Darwish Al Beloushi, Minister Responsible for Financial Affairs.

“The companies in Oman will need some time to ensure its execution as the draft is still being prepared by the government,” he said, adding that exemption will be made on some goods and services as per the agreement with other Gulf states.

On Monday, Oman’s Ministry of Finance postponed the decision to implement VAT until 2019.

The application of the selective tax on certain products will start by the middle of 2018, the ministry said.

In November 2016, Oman announced that it will implement VAT by the beginning of 2018, in a move to diversify its revenues amid the decline in oil prices.

The selective tax includes those harmful to health such as alcohol, tobacco, and fizzy and energy drinks.

In estimated income from VAT, Oman could add between $520 million (Dh1.9 billion, 200 million Omani riyals) and $779 million (300 million riyals) every year, according to the ministry.

The revenue generated will help diversify the country’s economy and provide a new source of income for government coffers.

Levying VAT is the outcome of joint efforts between Oman and other GCC states, according to the Ministry of Finance.

Since 2015, Oman has been cutting state subsidies and introducing other austerity measures to curb a budget deficit that has totalled 3 billion riyals in the first nine months of 2017.