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Explainer: Do you know how much you have to pay for cigarettes, drinks from June in Oman?

His Majesty Sultan Qaboos bin Said has issued a Royal Decree No 23/2019 that promulgates the Selective Tax Law.

Wednesday, March 13, 2019

Prices of tobacco, alcoholic drinks, energy drinks, and a few other items, will be costlier in Oman after 90 days from today, as His Majesty Sultan Qaboos bin Said has issued a Royal Decree No 23/2019 that promulgates the Selective Tax Law.

How Much Will it Cost?
Based on a government statement, on Wednesday, Oman Observer, the state-owned newspaper, reported that price of tobacco and its derivatives, alcoholic beverages, energy drinks, and pork will see an increase of 100%.

The report also added that the price of soft drinks (except for non-carbonated) will see an increase of 50%.

Role of Shura and State Council
In November 2018, the Majlis A’ Shura and the State Council had approved the draft law for selective goods tax at a joint session, which was called on the orders of His Majesty Sultan Qaboos.

During discussions, the two councils studied the draft, which was referred by the Council of Ministers.

The two councils agreed on articles 38  and 18 with some amendments, while articles 22, 49, 57 met with some differences between the members.

Two new articles were proposed by the Council of State.

The members stressed the importance of a consensus in view of the public interest by imposing a tax on goods that are harmful to human health and also the environment.

Saleh bin Saeed Masan, chairman of the Economic and Financial Committee, said there were five articles on which there is a disagreement and the members have made their comments in the draft law.

The Ministerial Decision No 64/2018 issued to impose local taxes/ charges on goods and services was published in the official gazette in April 2018.

As per the details, taxes of varying rates, to be borne by consumers, will be imposed on goods that are harmful to public health and the environment. It also includes luxury items.

Oman Observer, the state-owned newspaper, quoting a senior official at the Ministry of Finance had reported that there is an agreement among the Gulf Cooperation Council countries to impose taxes on alcohol, tobacco, carbohydrates and energy drinks.

The report added that on luxury goods, a decision has to be made on what kinds of goods are luxury, whether it is based on the pricing or the types of engines in the case of vehicles.

What if Sellers Take More Now?

Quoting the government statement, Oman Observer reported that an increase in the prices of goods that come under the selective tax before its date of implementation will be considered as an offense.

Any suspicion of an increase in the prices of these products can be reported before the law comes into force at the Public Authority for Consumer Protection (PACP) via Hotline (80079009 or 80077997).

Who else has Selective Tax in GCC?

According to a note from KPMG in November 2018, member states of the Gulf Cooperation Council (GCC) had agreed to introduce a selective tax on goods deemed harmful to human health and the environment, as well as luxury goods.

Saudi Arabia, the United Arab Emirates and Bahrain implemented this selective tax on carbonated drinks, energy drinks and tobacco products in 2017.

“Considering the rate of tax could range from 50 to 100 percent, the monetary impact may be significant and, if the transition is not handled effectively, could result in business disruptions,” KPMG note added.