Published on : Jun 13, 2019
The secretariat general of taxation of the Sultanate of Oman recently enforced an array of new taxes on a number of products. The sultanate wants to reduce its dependency on crude oil revenues, and hence the new taxes. Products ranging from alcohol and tobacco to energy drinks and ports are covered under these taxes. Further, the new taxes will come into force on June 15, 2019. Tobacco, pork meat, alcohol, and energy drinks would attract a 100% tax while carbonated drinks would subject to a 50% levy. In November 2018, a senior official in the Oman government stated that these taxes could add nearly US$260 mn in the annual revenues.
Although Oman is not an OPEC member but it is a major producer of crude oil. For April 2019, the average production was over 970,000 barrels. It exports crude oil to Asia, where China is the biggest market with 84% share. India and Japan are the remaining markets for Omani crude oil in Asia.
Countermeasures to Tackle Current Account Deficit
Just like other Gulf nations, Oman suffered a huge blow with the 2014 oil price crisis. It also hesitated to introduce any measures unwelcome by locals, to cope with the loss. However, at the end, it had to come up with these taxes to manage its economy. “This year the current account deficit of the Sultanate of Oman could swell to 9.1%. Hence, the government is introducing these countermeasures,” said an analyst at Bloomberg.
Oman is also working on renewable energy projects to diversify its economy. The latest projects are dealing with solar energy and are to be used in the oil industry.