DUBAI (Reuters) – Oman plans to expand exemptions from a value added tax (VAT) that it will introduce this month and increase certain subsidies to mitigate the impact on citizens of planned VAT, which is being introduced to help the Gulf state to reinforce your debt-laden coffers.
Oman will increase the number of VAT-exempt food products from 93 to 488 and raise the level of fuel, electricity and water consumption subsidies for families receiving government financial support, the state Oman News Agency reported on Thursday.
The measures, part of a package to help families during the pandemic, also exempt low-income citizens from repaying housing loans from the housing ministry, he said.
Oman will begin charging 5% VAT on April 16 to ensure the sultanate’s financial sustainability, after it has accumulated huge debts in recent years to make up for the drop in oil revenue.
It will join neighbors in the Gulf of Saudi Arabia, the United Arab Emirates and Bahrain, who have implemented VAT in recent years to diversify the state’s revenue.
The tax is one of a series of measures taken by the Omani ruler, Sultan Haitham, to improve fiscal efficiency after sensitive reforms took years under his predecessor, Sultan Qaboos, who died in January last year after half a century in power.
For the first time among oil-rich Gulf states, the sultanate also plans to introduce an income tax for those earning more from next year, as part of plans to reduce its deficit.
Reporting by Maher Chmaytelli; edition of Alex Richardson and Jason Neely